Morning Report

March 14, 2023

“The European Central Bank’s proposal for significant interest rate increases could encounter more resistance from within the organization following the recent failure of Silicon Valley Bank, but this is unlikely to affect the outcome of Thursday’s meeting. Some members of the Governing Council favour caution due to the changed economic environment, but a majority is expected to support the 50-basis-point hike.”

Tim Hallinan – Trading Director

Main Headlines

Large US banks are being inundated with requests from customers trying to transfer funds from smaller lenders. Several major financial institutions, including JPMorgan Chase, Citigroup, and Bank of America, are receiving a high volume of requests from customers looking to transfer their funds from Silicon Valley Bank and other smaller regional lenders. These large banks are making efforts to expedite the usual sign-up or “onboarding” process in order to accommodate these requests. The failure of SVB has caused what executives say is the biggest movement of deposits in more than a decade.

Jeremy Hunt is expected to offer nearly £1bn to create 12 new low-tax zones aimed at promoting economic growth and reducing regional disparities. The government plans to initiate talks with leaders in 12 locations around the country to establish investment zones that will receive £80mn each over five years, totalling £960mn in government support. The funds can be utilized for tax incentives, improving skills, providing business support, enhancing the planning system, or local infrastructure in these zones.


Sterling is stronger against euro and weaker against the dollar this morning. Pay growth in Britain has slowed down in the three months to January, with basic pay excluding bonuses rising by 6.5%, compared to 6.7% in the previous quarter. The Bank of England is closely monitoring pay growth as it considers whether to pause its interest rate hikes next week. Meanwhile, Olympic officials have urged the British government to respect the “autonomy of sport” after they attempted to lobby sponsors against a proposed pathway for Russian and Belarusian athletes to participate in the Paris Games.


Euro is weaker than most major currencies in the early morning trade. Credit Suisse identified “material weaknesses” in its internal controls over financial reporting and announced that it had not yet stemmed customer outflows in its delayed annual report released on Tuesday. The Kremlin claimed that Russia’s goals in Ukraine can only be achieved through military force due to Kyiv’s stance. Russia has maintained that it is fighting in Ukraine to “liberate” Russian speakers in the eastern Donbas from what it calls a neo-Nazi regime in Kyiv.


The dollar is well bid against most major currencies this morning. As California deals with a month-long series of winter storms, it prepares for another round of heavy rain, wind, and snow, while most of New York state and New England gear up for a powerful Nor’easter. The US, Australia, and Britain have disclosed a plan to provide Australia with nuclear-powered attack submarines from the early 2030s to counter China’s ambitions in the Indo-Pacific. Florida Governor Ron DeSantis said that getting “further entangled in a territorial dispute between Ukraine and Russia” is not a vital US national interest.


Treasury yields steadied after epic declines and US equity futures rose as investors await inflation data later Tuesday that may upend bets that the Federal Reserve is done tightening. The yield on the two-year Treasury climbed about 19 basis points to 4.17% after a volatile session in Asia. It’s still more than 80 basis points lower than this time last week. Plunging rates captured Wall Street’s attention yesterday, when the yield dropped more than a half-percentage point in the biggest move since the 1980s. The 10-year yield was little changed at 3.58%, while a gauge of the dollar snapped three days of losses.

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

8:00 a.m.: UK Feb. Jobless Claims Change
8:00 a.m.: UK Jan. ILO Unemployment Rate 3 Months
9:00 a.m.: Spain Feb. CPI
9:00 a.m.: Riksbank hearing on annual report, monetary policy
10:00 a.m.: Italy Jan. Industrial Production
1:30 p.m.: US Feb. CPI
Italy Istat Releases the Monthly Economic Note

Corporate Events

Earnings include Volkswagen, Rosneft


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