Update -

Treasury Market Commentary

A weekly economic update from our Treasury team.

Published

3rd September 2021

Category

Macro Commentary

Market focus today is on the critical US jobs data and how this may affect the timing of US monetary policy action. Expectations have grown recently that the Fed will start tapering its QE policy in the coming months as the economy continues to outperform and inflation pressures grow.

In the UK, the market is increasingly looking for a rate increase in May 2022, by an initial 0.15%.

The UK housing market posted strong figures once again this week, despite the unwinding of stamp duty relief.

Whilst in Europe, inflation jumped to a decade-high 3%, with the central bank expected to reduce its bond buying program later this year.

Global stocks remain near their record highs on the optimistic economic outlook.

On the currency markets, the dollar remains highly volatile but has fallen back a little following its recent surge.

GBP/USD has recovered from the yearly lows around 1.3600 and has pushed back above the 1.3800 level. The bigger levels remain 1.3500 and 1.4000. Today’s US jobs report at 1.30pm may prove pivotal to the next directional move.

GBP/EUR remains near its recent lows, with the EU having caught up on the vaccination rollout. Significant support remains at 1.1500, with corporate selling interest at the recent highs above 1.1800.

GBP/USD – 1-year chart

Week Ahead

Date

Release

Last

Expected*

6/9/21

UK New Car Registrations YoY

-29.5%

n/a

6/9/21

UK Markit/CIPS Construction PMI

58.7

n/a

9/9/21

UK RICS House Price Balance

79%

n/a

9/9/21

EU ECB Deposit Facility Rate

-0.50%

-0.50%

10/9/21

UK Industrial Prod. YoY

8.3%

n/a

10/9/21

UK Manufacturing Prod. YoY

13.9%

n/a

10/9/21

UK Trade Balance £/Mn

-£2514m

n/a

*Bloomberg survey / Not available

Foreign Exchange

Currency

Last

Currency

Last

EUR/USD

1.1875

USD/JPY

110.00

GBP/USD

1.3830

AUD/USD

0.7420

GBP/EUR

1.1645

GBP/AED

5.0800

USD/CHF

0.9140

XAU/USD

1813

Equity Indices

Indices

Previous Close

YTD % Change

FTSE 100

7168

+10.96%

S&P

4536

+20.79%

EUROSTOXX

4234

+19.19%

UK Benchmark Rates

Libor

 

Swap Mid (SONIA)

 

3 month

0.06375%

2 year

+0.26%

12 month

0.21813%

5 year

+0.45%

View Arbuthnot Latham’s Private and Commercial deposit rates.

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