September 9, 2022

“The expectation of the third straight jumbo rate hike by Fed is higher than ever as Powell sticks to hawkish view. Meanwhile, the European Union’s energy ministers’ meeting in Brussels to discuss ways to tackle the energy crisis will be closely watched.”

Sam Cornford, Partner – Head of Trading

Main Headlines

Former US President Donald Trump’s team may not have returned all the classified records removed from the White House at the end of his presidency. That revelation came in a Justice Department court filing asking US District Judge Aileen Cannon to let it continue reviewing about 100 classified records seized by the FBI at Trump’s Mar-a-Lago estate while it investigates whether classified documents were illegally removed from the White House and improperly stored there.

The Queen, Britain’s longest-serving monarch, passed away yesterday at the age of 96 after 70 years on the throne. Buckingham Palace said the Queen had “died peacefully” at Balmoral. Her passing prompted an outpouring of condolences from around the world, which marked the start of a tumultuous 10 days for the UK that will see the queen buried and a new king proclaimed as the nation mourns. Charles, who has now ascended the throne and will be known as King Charles III, paid tribute to his much-loved mother. The King and Camilla, now the Queen Consort, remained at Balmoral last night and are due to return to London today.

GBP

Sterling is well bid against most major currencies overnight. UK’s benchmark FTSE 100 index rose today led by commodity stocks and was set to end the week higher, after a few volatile sessions that saw the announcement of the country’s new Prime Minister and the death of its longest-reigning monarch.

EUR

Euro is stronger against the dollar and weaker against sterling this morning. The European Union is throwing together a series of radical plans to tame runaway energy prices and keep the lights on across the continent. The bloc’s energy ministers gather in Brussels today to take the first steps on ways to prevent Russian President Vladimir Putin’s cut-off of gas supplies from unleashing rationing, blackouts, or even social unrest. ECB officials are prepared to deliver another jumbo interest-rate increase at their October meeting if needed, according to people familiar with the debate.

USD

The dollar is weaker than most major currencies in the early morning trade. Federal Reserve Chair Jerome Powell in an appearance yesterday emphasised the importance of getting inflation down now before the public gets too used to higher prices and comes to expect them as the norm. The Fed gets its last look at inflation data before the meeting next week, when the Bureau of Labor Statistics releases the August consumer price index data. Economists are expecting a 0.2% headline increase in the CPI after it was flat in July.

Markets

The S&P 500 is down 7% since mid-August following a sharp summer rally, battered by expectations that the Federal Reserve will raise rates higher than previously anticipated in its fight to bring down consumer prices from their 40-year highs. European stocks bounced on Friday as banking stocks outperformed, with investors taking comfort from more consistent monetary policy after the European Central Bank’s rate hike. The Stoxx 600 Index added 0.5% this morning. Mining stocks advanced as metals rallied after the onset of the peak construction season in China bolstered sentiment.

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

8:00 a.m.: Norway Aug. CPI; Statistics Norway’s quarterly economic outlook
8:45 a.m.: France July industrial output
9:00 a.m.: Austria July industrial production
10:30 a.m.: Bank of Italy releases Banks and Money Monthly Statistics
10:30 a.m.: BOE/Ipsos inflation expectation survey
11:00 a.m.: Italy to sell bills
11:30 a.m.: Lagarde speaks
12:00 p.m.: UK to sell bills
6:00 p.m.: Russia 2Q GDP, Aug. CPI
7:00 p.m.: Baker Hughes US rig count
EU energy ministers meeting discuss emergency intervention in electricity markets
EU finance ministers meet in Prague, through Sept. 10.

Corporate Events

Earnings include Kroger

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