World awaits Omicron news
Two key issues to delve into today. First, the weather. Its been a bit chilly to say the least, a bitter wind was blowing over the weekend, we have a tiny smattering of snow here but I know many parts of the country have been hit much harder. The Spurs match in Burnley was called off yesterday due to snow and there are thousands of people still without power in Scotland after damage caused by Storm Arwen. Some poor folk have even been stranded in a pub in Yorkshire for a couple of days after going to watch an Oasis tribute band play on Friday evening.
The other main issue is of course the new Covid variant, Omicron. Little is still known really but it does seem as though it is easily transmissible, vaccines may be less effective against it and it could even have a higher reinfection rate. A few cases have so far been found in various EU countries including nine or so in the UK but I’d expect this number to rise quickly. Many countries have banned flights from Southern Africa, some such as Japan have closed borders altogether. In the UK face masks will once again be required in shops and on public transport, while travellers to the country will need to take a PCR test.
Over the past year or two i have taken a rather pessimistic tone over Covid, dating back to early news reports in Jan 2020. Unfortunately my concerns proved to be right. I fear now that this new strain, which is getting so much attention from the worlds health bodies, could deal a real blow to our Covid recovery, just when it was looking as though we might be getting the better of it. Early days I know, but I wouldn’t be at all surprised if we found ourselves locking down at some point in the coming weeks. As always it really depends on hospitalisations and deaths than simple infection numbers although any restrictions to limit infections will of course have a negative impact on economic growth.
Markets have reversed some of the initial losses seen last Friday as we await more details of Omicron. These details are unlikely to be known for a couple of weeks at least, most likely much longer as scientists and health experts do their thing. For now, the market will be nervous and vulnerable to shock headlines, but also likely to kick higher if some better news starts to get pushed around.
For now, GBPUSD is 1.3335, EURUSD 1.1275 and EURGBP 0.8450 (GBPEUR 1.1835). German inflation data comes this afternoon, as do speeches from various central bankers, including Powell. We have seen a lot of talk from Fed officials recently about possible speeding up of the tapering process, lets see if we get more of the same today. On Friday we have the latest US nonfarm payroll release, but there’s a lot to get through before we start thinking too much about that. Its not holiday times yet.
If you are waiting for an update from my young team, our match this weekend was called off. It was a cup tie, the opposition actually forfeited which means we march onto the next round but was a bit frustrating as we always like to play. However I must admit that when I stepped outside to walk the dog on Sunday morning I was rather pleased to not have to be standing on a freezing sideline.
So nothing to report from me, but do spare a thought for the Portugese team Belenenses who were playing Benfica in the top flight league match. Belenenses had been forced to start the match with only nine players, including a goalkeeper playing out on pitch, after a Covid outbreak. The match was abandoned at 7-0 to Benfica when the home side were reduced to just six players due to injuries. Seems a bit daft that they wold be forced to play the match to start with.
- 09.30 UK mortgage approvals
- 10.00 EU confidence data
- 13.00 German CPI, HICP
- 13.30 CAD current account
- 15.00 US pending home sales
- 19.00 BoCs Macklem, Schembri speak
- 20.05 Feds Powell speaks
- 22.05 Feds Bowman speaks
- 22.05 RBAs Debelle speaks
- 23.30 Japan unemployment
- 23.50 Japan industrial production
- 00.30 AUS building permits
- 01.00 China manufacturing, non-manufacturing PMI