Vive la Revolution
2017 is a critical year for European politics not to mention the triggering of Article 50 and Trump.
After a poor run for quite some time the pound finally had a good day yesterday.
|09:10||EU Retail PMI|
|12:00||US MBA Mortgage Applications|
|13:30||US Trade Balance|
After a poor run for quite some time the pound finally had a good day yesterday. The always closely watched Services PMI suggested that growth in the sector grew quicker than expected, igniting talk of another potential rate hike in August. The services PMI hit a three-month high of 54.0, up from 52.8 in April – A figure above 50 representing expansion. However, the commentary released alongside stated that some of the improvement was represented by companies catching up on work after heavy snow earlier in the year.So all in all, despite the decent improvement recorded in the PMI, the possibility that future reports may well pull back means that an August rate hike is by no means a done deal.
The much anticipated meeting between US President Donald Trump and North Korean leader Kim Jong–un will take place in Singapore on Sentosa island and is scheduled to take place on 12th June. The meeting will represent the first ever between a North Korean leader and a sitting US President. Like the UK services PMI, the US non-manufacturing ISM index climbed to 58.6 in May from 56.8 in April, delivering a beat on the 57.6 consensus and pointing to the US non-manufacturing sector expanding at a more solid rate still in mid-month of the second quarter. Note also, that the job openings figures released at the same time were also more solid than expected at 6,698k, up from 6,633k in March and providing another pointer on the strength of the US jobs market. This all points towards no softening in the data which means the plan for US rate rises continues.
After yesterday’s flurry of data releases things do calm a little today with US mortgage application data providing the main highlight although US trade balance data will prove a topical release given all the current talk on tariffs. We also have a number of external MPC members of Bank of England speaking today; Silvana Tenreyro is set to speak at a CBI lunch in Northern Ireland while Ian McCafferty will be on LBC radio for a public Q&A.
The month of June marks the second year since Great Britain voted to leave the European Union (EU). It has actually been two years! I know, it really does not feel like it has been that long. Two years on and we still have no clarity on what the post Brexit world will look like for the UK. The achievements so far have been an agreement on the divorce bill and a transitional period. But two years on it seems like the Government is still discussing the same issues, the Irish Border and what sort of ‘relationship’ we want to have with the EU going forward… a Customs Union or another special arrangement! They are not easy problems to solve. The EU withdrawal bill is expected to come to the Lower House of Parliament next week Tuesday, 12th June. Will it finally provide us with some clarity on what the future will look like? Time will tell. But in the meantime if you would like to discuss what this will mean for exposure then call the Investec FX team today.
The world outside these four walls the big news is that EU leaders managed to come to an agreement in the early hours of the morning on how to deal with rescued migrants.
As luck would have it, when I hit shuffle on my Spotify this morning Mungo Jerry’s “In the Summertime” came on.
Is it a bird? Is it a plane? Well your second guess was close enough, it’s a 3rd runway for Heathrow.
On the last trading day of the week, the most notable development in markets was a sharp lift in crude oil prices, with WTI and Brent rising 4.6% and 3.4%, respectively.
The pound inched higher yesterday afternoon as news broke Theresa May had managed to avoid a Tory rebellion and avoid defeat in Parliament over her flagship Brexit bill.