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  • richard evans

Markets shake off EU bank worries...for now...

Good morning

Option expiries back to 3pm London time, key US data releases back to 1.30pm/3.00pm london time after UK clock change this weekend.

Friday markets were hit by worries over EU banks despite Lagarde saying they’re all in good shape. Deutsche Bank was the potential victim this time as its shares fell and costs of default insurance rose, although general futures prices this morning suggest those fears have abated, for now at least. After making decent safe haven gains Friday, USD has lost some ground this morning with GBPUSD trading up from a low Friday around 1.2190 to 1.2260, EURUSD seeing a similar move from Fridays low of 1.0715 to 1.0780. GBP has made ground against EUR, now at 1.1375, almost in the middle of its recent range.

I do remain concerned about the pressure on mid-size banks and feel we are perilously close to a run on another bank at some point. I don’t think we’ve seen the last of it unfortunately. A Swiss minister said that with Credit Suisse’s rescue by UBS a major global financial crisis had been averted. Probably right.

Putins meeting with Xi last week doesn’t, for the time being, seem to have brought about any arms deal. China come out of it looking pretty good, putting forward a peace proposal, albeit one that doesn’t sit well with Ukraine. Putin meanwhile faces charges of war crimes although how anyone would possibly arrest him is beyond me. Talk that Russia are looking for a further 400,000 troops on top of the 300,000 they conscripted last year suggests their invasion, while not going fully to plan, does not look like stopping any time soon.

Russia is also looking to place nuclear missiles in Belarus, any talk of nuclear weapons is never good, but particularly as a joint China/Russia communique just last week said ‘nuclear powers must not deploy weapons beyond their borders’. That didn’t last long! Not sure China will be over the moon about that.

Elsewhere, Conte has left Spurs, not a surprise at all given his outburst against players and owners at a recent press conference. Once again I appear to have been overlooked as Spurs look for a successor. Meanwhile England beat Ukraine to boost their chances of reaching the Euro 2024 finals in Germany.

I managed to mow the lawn over the weekend, it has certainly started to grow and I think I caught it before it got too out of hand. The weather was pretty decent in between rain showers. We’ll have a bit more of the same this week but temperatures do look like they could climb Wednesday/Thursday which would be quite a pleasant experience.

A less than welcome piece of news over the weekend was the oil leak (and other fluids) at Poole Harbour. The hope is the leak was spotted quickly and reduced the chances of a major disaster but there is an obvious risk to wildlife and also humans, who have been told to wash immediately should they come into contact with the spill.

Not much economic data today but plenty of central bank officials speaking. I’d expect a few helpful messages along the lines of ‘the banks are fine,. Nothing to see here…..’. Central banks will certainly be earning their money now, balancing inflation risks, interest rates, economy and possible banking crisis. We’ll hear who Sturgeons successor as SNPs head will be later this afternoon. Whoever it is, they face a tough challenge amid reports of declining membership and disagreements within the party.

- 09.00 German IFO

- 09.30 ECBs Nagel speaks

- 14.40 ECBs Elderson speaks

- 16.00 ECBs Schnabel speaks

- 18.00 BoEs Bailey speaks

- 22.00 Feds Jefferson speaks

- 00.30 AUS retail sales

- 04.00 BoJs Kuroda speaks

- 04.15 RBAs Ellis speaks

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