Update

Treasury Market Commentary

​​​​A weekly economic update from our Treasury team.

Published

9th October 2020

Category

Macro Commentary

The virus infection rate continues to grow globally, leading to further lockdown measures, which in turn will slow the economic recovery and lead to even greater levels of government debt.

Despite Brexit negotiations intensifying, we look set to miss the initial October 15 deadline, with the UK threatening to walk away if there is no clear sign of a deal.

In the US, the Fed chairman called for more government support for the economy, warning of tragic consequences without urgent action.

Trump however, called off the stimulus talks until after the election, which increases the chances of further central bank easing.

Biden continues to hold a steady lead over Trump in the polls, but it is likely to be very close.

Whilst in Europe, the ECB also continues to call for urgent fiscal stimulus from governments to help support the ailing economy and attempt to drive up inflation and demand.

On the exchanges, sterling remains highly volatile within its recent ranges, and against the hugely uncertain outlook.

GBP/USD remains well supported around the 2-month lows of 1.2700, whilst on the topside we have initial selling interest at 1.3000, ahead of the more significant 1.3250 level.

GBP/EUR has found a short-term base at the recent low of 1.0800 and continues to pivot around the psychological 1.1000 level.

GBP/USD – 1-year chart

Week Ahead

Date

Release

Last

Expected*

13/10/20

UK Average Weekly Earns. 3M/YoY

-1.0%

-0.6%

13/10/20

UK Unemployment Rate

4.1%

 4.3%

13/10/20

US CPI YoY

1.3%

1.4%

16/10/20

EU CPI YoY

-0.3%

 -0.3%

*Bloomberg survey / Not available

Foreign Exchange

Currency

Last

Currency

Last

EUR/USD

1.1770

AUD/USD

0.7185

GBP/USD

1.2965

USD/AED

3.6730

GBP/EUR

1.1010

GBP/AED

4.7600

USD/CHF

0.9160

EUR/AED

4.3250

USD/JPY

105.95

XAU/USD

1909

Equity Indices

Indices

Previous Close

YTD % Change

FTSE 100

5889

-20.59%

S&P

3446

+6.69%

EUROSTOXX

3260

-12.93%

DFM GENERAL INDEX

2214

-19.90%

UK Benchmark Rates

Libor

 

Swap Mid

 

3 month

0.05213%

2 year

0.09%

6 month

0.07488%

3 year

0.14%

12 month

0.15125%

5 year

0.24%


View Arbuthnot Latham’s Private and Commercial deposit rates.

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