Morning Report

September 9, 2021

“The US stocks are stepping back from their high valuations due to investors getting worried about the combination of slowing global growth, the spread of the COVID-19 Delta variant, and the potential tapering of central bank stimulus. Investors could quickly bail out of risk, if the uncertainties are looking to become more prominent.”

Sam Cornford, Partner – Head of Trading

Main Headlines

Treasury secretary, Janet Yellen, warned the US Treasury risks running out of cash next month unless Congress increases its borrowing limit, as the Biden administration grows increasingly worried about a possible debt default. In a letter to congressional leaders on Wednesday, the Treasury secretary said she could not offer “a specific estimate” of when it would run out of cash, but the “most likely outcome” was that its coffers would be “exhausted” during October. The mounting risk of a US sovereign debt crisis complicates Biden’s efforts to pass his multitrillion-dollar economic agenda through Congress in the coming weeks.

The UK Prime Minister shrugged off a Conservative rebellion as he won a comfortable majority for his plan to raise taxes by £12bn a year to tackle a crisis in the NHS and social care. Johnson won a House of Commons vote by 319 to 248, in spite of a number of his own Tory MPs abstaining, with one rebel warning that the cash could be poured into a “bottomless pit”. Labour voted against the plan to Johnson’s delight. “They have actually voted against a tax rise to fund the NHS,” rejoiced an ally of the prime minister, claiming the opposition party had made a strategic error. Keir Starmer, Labour leader, said higher taxes should fall on “those with the broadest shoulders” but he has declined to say what exactly that means. The party said it would tax “all forms of income”, not just work.


Sterling is well bid against the dollar but weaker than the euro in the early morning trade. France’s interior minister has issued a comprehensive rebuff to a series of initiatives proposed by UK home secretary Priti Patel to combat cross-Channel clandestine migration. In a letter, Gérald Darmanin rejected proposals for a joint Franco-British command centre to deal with the problem; described plans for a joint intelligence unit on smuggling gangs as “premature”; rejected the possibility of a bilateral deal on migrant returns; and warned of the dangers of forcing migrant boats back towards the French coast. The letter marked a setback for Patel’s efforts to press France into taking new action to prevent clandestine crossings.


The euro is stronger versus most majors this morning. Poland will need to prove it is no longer defying the European court over judicial independence if it is to start receiving EU recovery money, the justice commissioner has warned, as he called for fines that put genuine pressure on Warsaw to change course. Didier Reynders said in an interview it was logical that the EU would not wish to disburse any of the €36bn Poland has applied for under the bloc’s Covid-19 recovery package, which is awaiting the EC’s approval, without a “real change” to its disciplinary regime for judges. After the commission asked the European Court of Justice to fine Poland for ignoring its decisions, Reynders added the penalties should be as high as €1m a day, although he stressed the decision was up to the court.


The dollar is lower than most majors overnight. A law that seeks to clamp down on Amazon’s use of productivity quotas has been passed by California’s state senate, paving the way for the first regulation of its kind in the US. Assembly Bill 701 is aimed at all companies using warehouse labour, but legislators have targeted Amazon in particular, highlighting the company’s outsized injury rate when compared to similar workplaces. The law will demand all warehouse operators that use quotas to provide detailed descriptions of any targets that workers are expected to meet — as well as the repercussions for missing them. These quotas will have to be provided to employees and government agencies.


Stocks declined along with U.S. and European equity futures Thursday as investors continued to fret over a slower economic recovery and the prospect of reduced central bank stimulus. The dollar advanced. MSCI Inc.’s Asia-Pacific gauge was on track for the biggest decline in three weeks as Japan ended a prolonged winning streak, sapped by a plan to extend a virus emergency for Tokyo and other areas. China’s technology stocks slid after officials told firms including Tencent Holdings Ltd. and Netease Inc. to end their focus on profit in gaming, again highlighting Beijing’s regulatory crackdown. Indebted developer China Evergrande Group plunged to the lowest since 2015. Australian equities tumbled as the nation grapples with a delta-strain outbreak. Gold was at $1,788.59 an ounce.

Main Economic Data/Central Banks/Government (All Times CET)

8:00 a.m.: Germany July trade, current account balances
9:10 a.m.: Riksbank’s Ingves speech on monetary policy
10:30 a.m.: Bank of Italy releases banks and money monthly statistics
11:00 a.m.: Italy to sell bills
11:00 a.m.: Ireland to sell bonds
11:00 a.m.: Hungary to sell bonds
12:00 p.m.: Ireland August CPI
1:00 p.m.: G-7 finance ministers conference call
1:45 p.m.: ECB main refinancing rate, marginal lending facility and deposit facility rate
2:30 p.m.: ECB’s Christine Lagarde press conference
5:00 p.m.: EIA U.S. crude oil inventories

Corporate Events

Earnings include Sun Hung Kai Properties, Dollarama, Sanlam, Wm Morrison Supermarkets, Genus, Computacenter


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