Good morning
Equities continue to push higher, helped by the news that the US debt ceiling will be raised to give some breathing space but only until December. The agreement allows US Treasury to meet its obligations up until 3rd Dec, which is also the day a short-term spending bill expires. This could make early December a rather tricky time for markets. I must be honest, I am not completely sure whether this debt ceiling is a good thing. Each year it seems it is reached and an agreement is then made to extend it. Why have it at all?
GBP made gains against USD but more significantly against EUR, EURGBP reaching 0.8475 (GBPEUR 1.1800). The announcement that UK is cutting red list countries to a list of just seven seems to help. EUR weakness seemed to come from ECBS Lane and ECBs Schnabel who both made it clear the current spike in inflation will not last, which is not quite on track with BoEs Pill who says higher inflation is likely to be more long-lasting than originally anticipated. As I type, GBPUSD is 1.3590, EURGBP 0.8495 (GBPEUR 1.1770) and EURUSD 1.1545.
China markets reopened after their Golden Week holidays, equities trading up around 1%, broadly in line with other global markets.
US nonfarm payrolls today where a headline reading of around +500k is expected versus a rather disappointing 235k last month. US 10 year yield are trading up to 1.6%, levels not seen since early June, but unless nonfarms are disastrous I’d expect the door will be open to Fed tapering next month which, together with high inflation must surely keep yields firm. CAD employment numbers are released at the same time, often overshadowed by its neighbour but important nonetheless. USDCAD currently 1.2550, it has been quite volatile recently but CAD strength coming through on higher oil prices.
It’s a US holiday Monday, Columbus Day. Before then we have a weekend to get through. For some of us the weekend stars early. It was always an unwritten code of conduct on our FX desk that we’d never to be off on the day US nonfarm payrolls are released. So I apologise sincerely to my colleagues as I have a lunch to attend today which will begin just around the time the numbers are due out. I’ll be thinking of you. Mind you nonfarms, despite still being one of the highlights of the economic calendar, does not have quite the same market impact that we used to see.
There was a great match yesterday, Belgium vs France, with Belgium taking a 2-0 lead before France turned things around and won 3-2, their winner coming very late in the game. Keep going until the final whistle, that’s the message and one I shall be imparting on my young footballers who face a team in the division above us in a cup match this weekend. It’ll be tough, that’s for sure. I’m not particularly impressed with the 2.30pm kick off time we have been presented by our opponents. Isn’t this supposed to be Sunday morning football?
- 09.30 UK FPC minutes
- 12.00 BoE quarterly bulletin
- 13.10 ECBs Lagarde speaks
- 13.30 US nonfarms payrolls
- 13.30 CAD unemployment
- 14.00 ECBs Panetta speaks
- 14.15 CAD housing starts
- 20.30 CFTC position data
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