Update –

Treasury Market Commentary

A weekly economic update from our Treasury team.

Published

15th October 2021

Category

Macro Commentary

The UK jobs market remains resilient with the number of workers on payrolls now above pre-covid levels, and job vacancies at an all-time high. Average earnings were up 7.2%, adding further upward pressure on inflation, which is expected to hit 4% by year end.

This increases pressure on the Bank of England to act, with some analysts now looking for an initial rate increase in December. However, with growth already stalling, it seems more likely the committee will prefer to wait to see how the economy performs over winter, as they will be very keen not to choke off the recovery.

Significant economic challenges lie ahead, notably the supply and labour market shortages, and surging energy prices, which risk pushing the economy towards stagflation.

Rising tensions between the UK and the EU over Northern Ireland, with the UK potentially triggering Article 16 next month, adds to the risks.

In Europe, the European Central Bank continues to reiterate that rising inflation will be transitory, with interest rates likely to remain negative until at least 2023.

On the exchanges, volatility remains extremely high, with sterling recovering strongly from its recent lows, supported by favorable interest rate differentials.

GBP/USD has pushed up towards 1.3700, whilst GBP/EUR is trading around the 1.1800 level, just ahead of the yearly highs at 1.1835.

GBP/USD – 1-year chart

Week Ahead

Date

Release

Last

Expected*

18/10/21

UK Rightmove House Prices YoY

5.8%

n/a

20/10/21

UK CPI YoY

3.2%

n/a

20/10/21

UK RPI YoY

4.8%

n/a

20/10/21

EU CPI YoY

3.0%

n/a

22/10/21

UK Retail Sales YoY

0.0%

n/a

22/10/21

UK Markit/CIPS Services PMI

55.4

n/a

22/10/21

UK Markit/CIPS Composite PMI

54.9

n/a

*Bloomberg survey / Not available

Foreign Exchange

Currency

Last

Currency

Last

EUR/USD

1.1610

USD/JPY

114.10

GBP/USD

1.3720

AUD/USD

0.7420

GBP/EUR

1.1815

GBP/AED

5.0410

USD/CHF

0.9235

XAU/USD

1787

Equity Indices

Indices

Previous Close

YTD % Change

FTSE 100

7212

+11.65%

S&P

4438

+17.68%

EUROSTOXX

4150

+16.82%

UK Benchmark Rates

Libor

 

Swap Mid (SONIA)

 

3 month

0.13500%

2 year

+0.72%

12 month

0.55713%

5 year

+0.85%


View Arbuthnot Latham’s Private and Commercial deposit rates.

This document should be considered a marketing communication for the purposes of the FCA rules. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is not subject to any prohibition on dealing ahead of the dissemination of investment research. The information given in this document is for information purposes only and is not a solicitation, or an offer to buy or sell any security or any other investment or banking product. It does not constitute investment, legal, accounting or tax advice, or a representation that any investment or service is suitable or appropriate to your individual circumstances.

You should seek professional advice before making any investment decision. The value of investments and the income from them can fall as well as rise. An investor may not get back the amount of money invested. Past performance is not a reliable indicator of future results. Investment returns may increase or decrease as a result of currency fluctuations.

The facts and opinions expressed are those of the author of the document, as of the date of writing and are liable to change without notice. We do not make any representations as to the accuracy or completeness of the material and do not accept liability for any loss arising from the use hereof. We are under no obligation to ensure that updates to the document are brought to the attention of any recipient of this material. Please note that this commentary may not be reproduced, distributed, disseminated, broadcasted, sold, published or circulated without prior consent from Arbuthnot Latham & Co., Limited. Arbuthnot Latham & Co., Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.

 

 

Weekly

Treasury Market Commentary

Would you like to receive Arbuthnot Latham’s weekly Treasury Market Commentary directly to your email inbox? Click the button to subscribe to our email newsletters.

Subscribe to our newsletters

Contact Details

London Office

+44 (0) 20 7012 2599

DG-FX@arbuthnot.co.uk