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  • richard evans

How long can Truss survive?

Good morning


Truss got through PMQs yesterday but her Home Secretary Braverman resigned with an attack on Truss in her resignation letter, and then there was mayhem around a fracking vote, where some MPs were reportedly manhandled as they tried to vote against the plan. Truss’s leadership seems to be close to collapse, it is impossible really to see how she can continue. We wait to see if more members of her cabinet will resign. The Tory party is in chaos, I wonder how those people who voted Truss in over the other leadership contenders are feeling now. And I wonder what Boris is muttering to himself.


The political chaos hasn’t really impacted GBP. GBP did fall against the US dollar although this was more on the back of US strength after more hawkish comments from Fed officials, but it kept up with most other currencies, although currently towards the lower end of recent ranges against EUR, now 1.1475, close to support which comes in around 1.1460. One of the big rating agencies, DBRS, has placed UKs rating under review, citing various factors including political instability, fall of GBP, higher rates, bond market turmoil, lack of clarity on fiscal plans.


The stronger US dollar has helped USDJPY push higher, as I type we are just a pip or two away from 150.00 and I know many who are watching closely for some additional intervention from Japan. So far we have just had the usual ‘disorderly moves are undesirable’ comments from Japanese officials. BoJ were apparently active in the bond markets as 10 year yields rose above the upper end of BoJs target.


CBRT, the Turkish central bank, are expected to but rates by 1% at their meeting today. USDTRY is trading up around 18.60 where there seems to be good resistance, I presume there is something official at this level, I’ll look into it. TRY weakness is quite frightening, it has been for some time, you may remember the moves late last year when USDTRY traded up to 18.25 or so before falling to 10.25, it has been working its way higher again ever since. Will yen head the same way?


Some talk China may be looking to reduce the covid quarantine period for inbound travellers got the market a bit excited overnight, but the reality is the drop may reduce the period from ten days down to seven, hardly a major impact while the zero-covid policy is in place. Mind you, it could be a very small step in the gradual unwinding of restrictions but there is an awfully long way to go yet. Nothing to get too excited about just yet.


Nothing really on the calendar from Europe this morning, we do have US jobless claims this afternoon along with some Fed officials speaking. UK consumer confidence and overnight and retail sales early tomorrow morning, but the focus will be very much on Truss and her government.



- 12.00 Turkey rate announcement

- 13.30 US initial jobless claims, philly fed survey

- 18.30 Feds Jefferson speaks

- 18.45 Feds Cook speaks

- 19.00 US monthly budget statement

- 22.45 NZ trade balance

- 00.01 UK GfK consumer confidence

- 00.30 Japan CPI

- 07.00 UK retail sales


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