Update –

Treasury Market Commentary

A weekly economic update from our Treasury team.

Published

23rd October 2020

Category

Macro Commentary

The virus infection rate is hitting new record highs across Europe, whilst US hospitalisations are at a 2-month high.

Further lockdown measures, and increased government support will continue to cause massive damage to the global economy.

The Brexit negotiations resumed yesterday, aiming to reach an agreement by mid-November, but huge differences remain on the key issues.

UK inflation remains incredibly weak, but has ticked up to 0.5%, from last month’s 5-year low of 0.2%.

There is an increasing likelihood that the Bank of England will have to ease monetary policy further in the coming months.

In the US, there appears to be some progress towards reaching an agreement on the next economic stimulus package, but a deal before the election still seems unlikely.

Biden continues to hold a steady lead in the polls, but uncertainty is high, and markets remain nervous.

On the exchanges, the dollar has weakened considerably, with sterling benefitting from some optimism on Brexit.

GBP/USD hit a 6-week high just short of 1.3200 this week. There is some buying interest now at the pivotal 1.3000, whilst the year-to-date high just below 1.3500 remains a hugely significant barrier.

GBP/EUR continues to probe the recent high of 1.1100 but remains within the well-established range of 1.0800 – 1.1200.

GBP/EUR – 1-year chart

Week Ahead

Date

Release

Last

Expected*

29/10/20

UK Mortgage Approvals

84.7k

 75.0k

29/10/20

US GDP Annualised QoQ

-31.4%

32.0%

29/10/20

EU ECB Marginal Deposit Rate

-0.50%

-0.50%

30/10/20

EU GDP SA YoY

-14.7%

 -7.4%

30/10/20

EU CPI Estimate YoY

-0.3%

 -0.3%

*Bloomberg survey / Not available

Foreign Exchange

Currency

Last

Currency

Last

EUR/USD

1.1805

AUD/USD

0.7120

GBP/USD

1.3060

USD/AED

3.6730

GBP/EUR

1.1065

GBP/AED

4.7990

USD/CHF

0.9075

EUR/AED

4.3360

USD/JPY

104.80

XAU/USD

1906

Equity Indices

Indices

Previous Close

YTD % Change

FTSE 100

5785

-23.29%

S&P

3453

+6.89%

EUROSTOXX

3171

-15.32%

DFM GENERAL INDEX

2194

-20.62%

UK Benchmark Rates

Libor

 

Swap Mid

 

3 month

0.04888%

2 year

0.08%

6 month

0.07063%

3 year

0.13%

12 month

0.12938%

5 year

0.25%


View Arbuthnot Latham’s Private and Commercial deposit rates.

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Weekly

Treasury Market Commentary

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