29th November 2017 Market Update
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?? GBP – The banking sector posted positive news yesterday morning as all seven major UK banks passed the BoE’s stress tests – indicating that the banking sector is still in decent shape. However, investors were quick to pick up on BoE Governor Carney’s comments in which he stated that the banks could cope with a “disorderly” Brexit, though this would likely hamper British households and businesses and dampen the nation’s economic growth. The comments weighed on the pound till late in the afternoon when the Telegraph reported that the UK and the EU have agreed on the principle of the so-called Brexit Bill. This will mean the UK will honour its financial commitments with a payment in the region of €45-55bn. The news helped lift the pound across the board as it would seem as though progress will be made when Prime Minister Theresa May formally presents the offer as part of a package deal next week.
This morning consumer credit and mortgage approval figures will be released but markets will largely focus on digesting last night’s news and looking for further details on the package that the UK PM will look to offer the EU next week.
?? EUR – There was nothing of note released from the Eurozone yesterday, though today we await consumer confidence figures and German inflation readings, which are expected to show an increase ahead of the wider Eurozone inflation reading tomorrow.
?? USD – The Fed Chair nominee Jerome Powell stood his confirmation hearing yesterday and largely supported the view that he will stick to his predecessor’s monetary policy strategy by continuing the gradual interest rate hiking cycle, though he admitted that there may be some more slack in the jobs market. In addition, the US senate budget committee passed the senate tax bill yesterday, as expected.
Today, third quarter GDP and inflation readings are expected to show an increase ahead of Fed Chair Yellen’s testimony and the Fed’s Beige Book release this evening.
09:30am: UK Consumer credit and Mortgage approvals
10:00am: EU Consumer Confidence
13:00pm: German Harmonised CPI expected at 1.7% from 1.5%
13:30pm: Q3 GDP expected at 3.2% from previous 3.0%
13:30pm: Core PCE expected at 1.4% from previous 1.3%
15:00pm: Fed’s Yellen Testifies
19:00pm: Fed’s Beige Book
Summary: News out late in the afternoon yesterday that the UK is making real progress by agreeing to the EU divorce bill helped buoy the pound across the board, this will likely be the talk of the day today, though markets will seek further clarity on the whole package that the UK PM will present next week. The package will need to clarify contentious issues such as the Northern Ireland border and protecting EU citizens’ rights.
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