Update -

Treasury Market Commentary

A weekly economic update from our Treasury team.

Published

13th November 2020

Category

Macro Commentary

The initial reaction to Biden’s election victory has been a strong rally in global equity markets, and a general weakening of the US dollar.

The news of a breakthrough in the vaccine trials has further buoyed the markets this week.

However, the growing virus infection rates in Europe and the US remain a major concern, with the lockdown measures continuing to massively weaken the global economy.

In the UK, the recovery remains hugely unbalanced, with housing strongly outperforming, helped by the stamp duty holiday and record low interest rates. Unemployment has nudged up to 4.8%, whilst wages increased by a slightly stronger than expected 1.3%.

The UK economy grew by a record 15.5% in the third quarter, following an almost 20% drop in the second quarter, but is still 10% lower than pre-crisis levels, and we expect further weakness to come due to the current lockdown situation.

The Brexit negotiations will continue to be a key driver of market sentiment, though huge differences remain on the key issues, with time running critically short.

On the exchanges, sterling pushed up to its highest levels since early September over the past few days on hopes that a Brexit agreement will be reached.

GBP/USD briefly touched 1.3300 before falling back towards 1.3150. There remains significant selling interest ahead of the critical 1.3500 level, whilst 1.3000 will provide initial support.

GBP/EUR pushed up towards 1.1300 before swiftly running out of steam and dropping back towards 1.1100.  

GBP/USD – 1-year chart

Week ahead

Date

Release

Last

Expected*

16/11/20

UK Rightmove House Prices YoY

5.5%

 n/a

18/11/20

UK CPI YoY

0.5%

 0.6%

18/11/20

UK RPI YoY

1.1%

 n/a

18/11/20

EU CPI YoY

-0.3%

-0.3%

20/11/20

UK Retail Sales YoY

4.7%

 4.0%

*Bloomberg survey / Not available

Foreign Exchange

Currency

Last

Currency

Last

EUR/USD

1.1815

AUD/USD

0.7245

GBP/USD

1.3160

USD/AED

3.6730

GBP/EUR

1.1135

GBP/AED

4.8350

USD/CHF

0.9155

EUR/AED

4.3400

USD/JPY

105.05

XAU/USD

1880

Equity Indices

Indices

Previous Close

YTD % Change

FTSE 100

6348

-15.83%

S&P

3537

+9.48%

EUROSTOXX

3434

-8.30%

DFM GENERAL INDEX

2262

-18.16%

UK Benchmark Rates

Libor

 

Swap Mid

 

3 month

0.04288%

2 year

0.09%

6 month

0.06775%

3 year

0.15%

12 month

0.13750%

5 year

0.26%


View Arbuthnot Latham’s Private and Commercial deposit rates.

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Weekly

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