Update -

Treasury Market Commentary

A weekly economic update from our Treasury team.

Published

19th February 2021

Category

Macro Commentary

Global interest rates continue to rise from their historic lows, as optimism grows on the vaccine rollouts, and the market begins to look ahead and focus on the recovery.

The prime minister is due to make an announcement on Monday on the government’s plans for easing the lockdown and reopening the economy. We then have the budget due on March 3rd, which will obviously be the most challenging for many years, with the chancellor balancing huge government debt against boosting economic activity.

UK headline inflation nudged up to 0.7%, slightly ahead of market expectations, but still some way off the Bank of England target of 2%.

In Europe, Mario Draghi has begun work as the new Italian prime minister, enjoying unparalleled support across the board. His leadership is seen as a positive factor for the EU going forward.

Whilst in the US, talks continue on the next economic stimulus aid package, with the market hoping to see some progress next week. The US vaccination program continues to gain momentum, and the economic data has been much stronger than expected this week.

On the exchanges, sterling strength again continues to dominate, driven by the success of the UK vaccine program and pent-up demand following Brexit.

GBP/USD is moving towards a three year high at close to 1.4000, where there is some initial corporate supply. There is further strong demand building now at 1.3750.  

GBP/EUR has broken through 1.1500, to its highest levels since the outbreak of the pandemic.

Week Ahead

Date

Release

Last

Expected*

23/2/21

UK Unemployment Rate

5.0%

5.2%

23/2/21

UK Average Weekly Earns. 3M/YoY

3.6%

n/a

23/2/21

EU CPI YoY

-0.3%

n/a

*Bloomberg survey / Not available

Foreign Exchange

Currency

Last

Currency

Last

EUR/USD

1.2110

AUD/USD

0.7800

GBP/USD

1.3985

USD/AED

3.6730

GBP/EUR

1.1545

GBP/AED

5.1380

USD/CHF

0.8950

EUR/AED

4.4500

USD/JPY

105.60

XAU/USD

1774

Equity Indices

Indices

Previous Close

YTD % Change

FTSE 100

6617

+2.42%

S&P

3913

+4.20%

EUROSTOXX

3681

+3.61%

DFM GENERAL INDEX

2576

+3.26%

 

UK Benchmark Rates

Libor

 

Swap Mid (SONIA) ss((SONIA)

 

3 month

0.05913%

2 year

+0.05%

6 month

0.07638%

3 year

+0.11%

12 month

0.12800%

5 year

+0.27%


View Arbuthnot Latham’s Private and Commercial deposit rates.

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Weekly

Treasury Market Commentary

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