Update –

Treasury Market Commentary

A weekly economic update from our Treasury team.

Published

30th April 2021

Category

Macro Commentary

The US central bank kept policy on hold this week as expected, reiterating that rates will stay lower for longer as they remain cautious on the economic recovery, and will look through any transitory inflationary pressures.

US president Biden continues to push for further fiscal stimulus, to be paid for by higher taxes on corporations and the very wealthy.

The Bank of England meets next week, and again we expect no change to monetary policy, although they are likely to upgrade their growth forecasts for this year and next. Most analysts now expect interest rates to rise by about 50bps over the next three years, starting in 2023, having been expecting a cut into negative territory in February.

We also have local elections in the UK next week which will likely add some volatility to the market.

In Europe, they are now making significant progress on the vaccine rollout, which is expected to improve further in the coming months. The potential for vaccine passports is very encouraging for the summer tourism industry, particularly for the southern European nations.

On the exchanges, we remain within familiar ranges, with US fixed income markets and month end flows driving momentum.

GBP/USD has some initial buying interest now at 1.3800 and continues to focus on the recent high at the pivotal 1.4000 level.

GBP/EUR remains in a very tight range, with consistent buying interest below 1.1500, but lacking the momentum to gain a foothold above 1.1600.

GBP/USD – 1-year chart

Week Ahead

Date

Release

Last

Expected*

4/5/21

UK Mortgage Approvals

87.7k

n/a

4/5/21

UK Markit Manufacturing PMI SA

60.7

n/a

5/5/21

UK New Car Registrations

11.5%

n/a

6/5/21

UK Markit/CIPS Services PMI

60.1

n/a

6/5/21

UK Markit/CIPS Composite PMI

60.0

n/a

6/5/21

UK Bank of England Bank Rate

0.10%

0.10%

7/5/21

UK Markit/CIPS Construction PMI

61.7

n/a

7/5/21

UK Change in Nonfarm Payrolls

916k

888k

*Bloomberg survey / Not available

Foreign Exchange

Currency

Last

Currency

Last

EUR/USD

1.2115

AUD/USD

0.7775

GBP/USD

1.3940

USD/AED

3.6730

GBP/EUR

1.1510

GBP/AED

5.1200

USD/CHF

0.9085

EUR/AED

4.4485

USD/JPY

108.80

XAU/USD

1772

Equity Indices

Indices

Previous Close

YTD % Change

FTSE 100

6961

+7.76%

S&P

4211

+12.12%

EUROSTOXX

3996

+12.50%

DFM GENERAL INDEX

2605

+4.34%

 

UK Benchmark Rates

Libor

 

Swap Mid (SONIA) ss((SONIA)

 

3 month

0.08513%

2 year

+0.14%

12 month

0.16513%

5 year

+0.49%


View Arbuthnot Latham’s Private and Commercial deposit rates.

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Weekly

Treasury Market Commentary

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