Update -

Treasury Market Commentary

A weekly economic update from our Treasury team.

Published

26th March 2021

Category

Macro Commentary

Market sentiment has weakened this week following the recent optimism, and we have moved to a more risk-averse environment. Growing fears over vaccine supply chains, a third wave in Europe and heightened tensions between the EU and the UK have led to a general weakening of equities and longer-term yields from their recent highs, and a strengthening of the dollar.

UK data has also been weaker than expected, particularly headline inflation which came in at just 0.4%, though this should increase considerably as the lockdown eases. The jobs market remains relatively robust, though the figures continue to be heavily distorted by the furlough scheme.

Focus remains on the lockdown easing timetable and hopes that the government can continue the huge success of the rollout, which will spur the economic recovery.

In the US, the vaccination program is seeing continued success, whist the head of the US central bank this week reiterated that interest rates will remain at zero through 2023, as they look through any transient rise in inflation.

On the exchanges, strong dollar buying has driven market momentum this week

GBP/USD dropped from 1.4000 down to 1.3700, its lowest since early February, where we have found a short-term base. The next major support zone is at 1.3500. 

GBP/EUR, having so far failed to gain a foothold above 1.1700, initially dropped back towards 1.1600 where we have seen some decent corporate demand, ahead of the more significant 1.1500 support level.

GBP/EUR – 1-year chart

Week Ahead

Date

Release

Last

Expected*

29/3/21

UK Mortgage Approvals

99.0k

n/a

31/3/21

UK Nationwide House Px NSA YoY

6.9%

n/a

31/3/21

UK GDP YoY

-7.8%

n/a

1/4/21

UK Markit Manufacturing SA PMI

57.9

n/a

2/4/21

US Change in Nonfarm Payrolls

379k

600k

*Bloomberg survey / Not available

Foreign Exchange

Currency

Last

Currency

Last

EUR/USD

1.1790

AUD/USD

0.7620

GBP/USD

1.3765

USD/AED

3.6730

GBP/EUR

1.1680

GBP/AED

5.0550

USD/CHF

0.9410

EUR/AED

4.3290

USD/JPY

109.35

XAU/USD

1727

Equity Indices

Indices

Previous Close

YTD % Change

FTSE 100

6674

+3.31%

S&P

3909

+4.09%

EUROSTOXX

3827

+7.75%

DFM GENERAL INDEX

2495

+0.12%

 

UK Benchmark Rates

Libor

 

Swap Mid (SONIA) ss((SONIA)

 

3 month

0.08838%

2 year

+0.10%

6 month

0.10925%

3 year

+0.21%

12 month

0.16163%

5 year

+0.41%


View Arbuthnot Latham’s Private and Commercial deposit rates.

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