Last night’s “challenger’s debate” on the BBC provoked little market response despite, eventually, making for some quite interesting viewing.
20 days to go
The theme of a left-wing coalition led by Labour but roundly proposed by SNP Leader Nicola Sturgeon gathered momentum in a bid to kick Cameron and the Tories out of Downing St. Miliband was unhappy with the offer from the SNP however, knowing that an alliance with a separatist party plays very poorly below Hadrian’s Wall. While the biggest loser was indeed the absent PM, unable in his absence to stick up for anything that has happened in Government for the past 5 years, I agree with those are saying that the person who gained the most was actually Nigel Farage.
I am not a UKIP voter and never will be but his digs at the audience were an easy way of rallying his base. Farage was made to be uncomfortable, was put upon and ganged up against by the other members of the panel last night, echoing the feelings of his supporters. Farage striking out at a liberal, metropolitan, easy-spending audience was not frustration and not winning their votes and will have had those who agree with him, cheering.
Sterling was unaffected by the whole thing and has continued its recent run higher against the dollar through the Asian session. Today’s jobs report from the UK will once again be a focus on the performance of wages. If the continuing declines in unemployment are finally starting to see wage pressures emerge then I will be happier upgrading the possibilities for sterling through the second half of the year. Wages, alongside the unemployment rate and the claimant count, are due at 09.30.
IMF unwilling to help Greece further
Things are starting to get real in Greece it seems. Last night, the IMF as good as ruled out any delay or extension to repaying EUR1bn next month. Head of the IMF, Christine Lagarde told reporters that a delay had “been granted to a couple of developing countries … and that was not followed by very productive results”. This morning a Greek newspaper is reporting that offices of Greek banks based abroad are being told to sell off what holdings in Greek debt they still have.
In comparison to the compression in the yields that we are seeing on most government debt in the Eurozone, the moves in the debt of Greece are once again showing a market that is increasingly pricing in the risk of default and exit from the Eurozone. The fact that Messrs Tsipras and Varoufakis are yet to have presented a detailed enough plan to European Finance Ministers cannot be ignored and shows that, without a significant change in stance and tactics from Athens, the news will worsen in the coming weeks.
Dollar giving up its gains
News from the US economy once again kept the USD on the back foot yesterday. Obviously there are weather issues that the US economy contended with in the first quarter and yesterday’s slip in the number of housing starts largely reflects that. The recent poor US data, especially this month’s slowing of gains in employment, has increased fears that the thawing of the ground may not equal a thawing of the recent economic chill. Both the Presidents of the Atlanta and Boston Federal Reserves overnight stated that they were wary of raising interest rates too early.
US inflation is due this afternoon amid the belief that the majority of the deflationary pressures on the world economy are softening; demand is picking up, prices outside of energy are increasing, oil markets have regained some poise in the past month and wages are on the up. Until this is shown in CPI numbers however expect the world’s central banks to keep their fingers off the trigger.