24 June 2021

“Market participants are trying to price in conflicting messages from the Fed officials on the timing of stimulus withdrawal. The Bank of England’s meeting could address the unexpected consumer price data growth in today’s meeting but the committee is expected to leave monetary policy unchanged.”

Sam Cornford, Senior Trader

Main Headlines

The White House said a “potential agreement” with bipartisan negotiators in Congress was within reach on an infrastructure investment package that is expected to top $1tn. The Democrats and Republicans emerged from a meeting with top officials yesterday saying work would continue on some unresolved details – lawmakers plan to meet with Biden today to try to complete a deal. Recent talks have focused on how to finance the package, which drafts showed would spend $579 billion above expected federal levels for a total of $973 billion over five years and $1.2 trillion if continued over eight years.

A surge in cases of the delta variant continued to push the UK’s coronavirus infection numbers to levels not seen since the winter, even with most of the adult population now fully vaccinated. With more than 60 percent of adults in the country having received two shots, there’s growing optimism among experts that the vaccine roll-out has broken the link between cases and deaths. Still, the recent surge in cases is threatening plans by Boris Johnson’s government to reopen the country, and while vaccines appear to be effective against the latest variant, a rise in cases poses the threat of further mutations.

GBP

Sterling is weaker against most major currencies this morning. The BoE Monetary Policy Committee announcement due at 12 pm today has been dominated by a jump in consumer-price growth above the BOE’s 2% target for the first time in almost two years. The UK government will convene a London summit to help tackle the lagging Covid-19 vaccination uptake in the capital, as the government tries to inoculate the most vulnerable groups ahead of the planned lifting of pandemic curbs next month.

EUR

The euro is higher against most other majors overnight. Germany will borrow an additional €100bn next year, up by €18.2bn on previous estimates, in a sign of the huge strain the pandemic will continue to place on the public finances of Europe’s largest economy. Germany’s finance ministry has come under fire over an attempt to secretly interfere with the questioning of a key witness during a parliamentary inquiry into Wirecard, a potential breach of parliamentary etiquette. France and Germany have suggested inviting Vladimir Putin to a summit with the EU as part of a broader reset of the bloc’s relations with Russia.

USD

The dollar is higher against the pound and lower against the euro in the early morning trade. Bian Deese, a senior economic aide to Joe Biden has called on the US to embrace openly an “industrial strategy” to shore up its manufacturing base, including partnering with allies to bolster crucial supply chains. US officials confirmed that genetic sequence data on some of the earliest samples of coronavirus in China were removed from an American database where they were initially stored at the request of Chinese researchers, amplifying concerns over secrecy surrounding the outbreak and its origins.

Markets

Asian stocks were steady Thursday after U.S. shares moved in narrow ranges as traders digested commentary from Federal Reserve officials on the outlook for stimulus. Treasuries were little changed. Stocks edged lower in Japan and fluctuated in China, where the central bank boosted its short-term cash injection for the first time since March. Australia underperformed amid an outbreak of the delta strain of coronavirus in Sydney. U.S. futures advanced, following a modest drop in the S&P 500 despite gains among firms that benefit from economic reopening. A rally in Tesla Inc. helped the Nasdaq Composite eke out another record.

Main Economic Data/Central Banks/Government (All Times CET)

8:45 a.m.: France June manufacturing confidence

9:00 a.m.: Spain 1Q GDP

10:00 a.m.: ECB publishes economic bulletin

10:00 a.m.: Germany June Ifo Survey

1:00 p.m.: BOE rate decision

1:30 p.m.: ECB’s Panetta speaks

2:30 p.m.: U.S. initial jobless claims; 1Q GDP, personal consumption; May wholesale inventories, durable goods

5:30 p.m.: ECB’s Schnabel speaks

EU leaders meet in Brussels

Corporate Events

Fed releases U.S. banks stress test results

Earnings include Nike, Accenture, Carnival, Fedex

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