Asymmetric data and event risk

With the August lull behind us, developed central bank monetary policy has taken centre stage, with the focus in particular on the Fed and Bank of England. Both have signalled that they could deliver a 25bp hike before end-year.

Rates markets have adjusted accordingly and the focus as we enter the last leg of 2017 will be on whether macro data and events support this hawkish turn. Accordingly, I have compiled a comprehensive data and event release calendar for major economies (Figure 1).

Markets now have 17bp of Fed hikes priced in for the remainder of the year versus 7-8bp in early September – in line with my view that pricing was probably too skinny for the liking of a Fed keen to keep its options open while minimising any market fall-out.

Markets are pricing an 80% probability of the BoE hiking its policy rate 25bp to 0.5% at its 2nd November meeting and a further 30bp of hikes for 2018 – a very slow and gradual rate hiking cycle which would mimic the Fed’s tightening in 2015-2016.

The Fed and BoE have cried wolf in the past only to then keep rates on hold. Precedent suggests that a combination of very weak domestic and global macro data and significant Brexit-related setbacks (for the UK) could derail these central banks’ aspirations.

But my twin forecasts of the Fed hiking only twice this year and the BoE only starting to hike in 2018 are clearly at risk. Both central banks have, in my view, set the bar pretty low for a Q4 hike or put differently set the bar quite high to keep rates on hold.

The corollary is that financial markets’ reaction function to forthcoming macro data and events could be asymmetric, with bond yields rising and the Dollar and Sterling strengthening further on the back of good data and/or positive event risk but not reacting as much to weak data and/or negative event shocks.

The Fed confirmed at its policy meeting that it would start as of October reducing its $4.5trn balance sheet. The timeline and timescale, which had been flagged at its June policy meeting, is clearly designed to be slow and gradual in a bid not to spook markets and avoid a repeat of the 2013 tapper-tantrum.

I argued in Paradox of acute uncertainty and strong consensus views (3 January 2017) that “German general elections scheduled for September may well lead to a more divided parliament, making it harder to form a majority coalition government. But it is difficult at this stage to see who will realistically challenge Chancellor Merkel who is striving for a fourth consecutive election victory”. Nine months on and with German federal elections scheduled for Sunday my view has not changed materially.

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Appetite for destruction… and procrastination

Financial markets continue to take into their stride a number of man-made and natural crises and the procrastination of policy-makers in the US, UK and Eurozone.

Global risk appetite remains seemingly well bid despite the still very opaque end-game for rising geopolitical tensions stemming from North Korea and the impact from Hurricanes Harvey and Irma.

In the world of FX, the emerging market carry trade is seemingly enjoying a mini-revival thanks to low yields in developed economies, signs that global GDP growth continues to inch higher and a surge in commodity prices, particularly industrial metals.

Event risk is clearly more acute in September than it was in August but it is not obvious to me that major central banks will deliver the kind of surprises which cause major dislocations in financial markets, including EM currencies.

However, these high-yielding EM currencies’ volatility versus the Dollar remains quite elevated, with perhaps the exception of the Turkish Lira and Indian Rupee.

Chinese policy-makers are seemingly intent, at least for now, on using Renminbi appreciation as a show of strength and I expect further currency gains near-term.

In the UK, the mammoth challenge facing Prime Minister Theresa May is coming into greater focus. Moreover, the Bank of England is unlikely to seriously consider a rate hike before next year, in my view.  With this in mind, I see the risk biased toward bouts of Sterling weakness.

The Euro, which eked out small gains versus the Dollar and Sterling following ECB President Draghi’s Q&A session, is ultimately behaving like a safe-haven currency.

I expect the common currency to benefit, not suffer, from lower interest rates for longer and the associated improvement in economic activity even if future Euro appreciation could be modest rather than spectacular.
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We know what you did this summer

The month of August has come and gone and I struggle to pinpoint any new, clear-cut common themes. There has been plenty of news and developments for financial markets to digest and react to, including North Korea’s recent missile launch over Japanese airspace, the devastating impact of hurricane Harvey in Texas, the looming US debt ceiling breach, President Trump’s threats of terminating/re-negotiating NAFTA, ongoing Brexit negotiations between the UK and European Union and French President Macron’s announcement of ambitious labour market reforms.

However, the Economic Policy Symposium in Jackson Hole on 24-26 August promised a lot but as often the case delivered little for markets to hook their teeth into. Moreover, macro data in the past few weeks have not really told us anything really new. Gains in global GDP growth are incremental but 3% seems like a reasonably robust floor. Today’s global manufacturing PMI data for August (due for release at 16:00 London time) are worth paying attention to given the decent correlation with global GDP growth according to my analysis (see Figure 1).

 

Olivier Desbarres I know Fig 1

The mirage of much higher inflation in developed economies remains largely just that – a mirage – which I attribute in part to tepid real wage growth – at least in the US, Australia and in particular the UK. This presents somewhat of a dilemma for the Federal Reserve, far less so for the Bank of England and Reserve Bank of Australia as I discuss below.

This explains in large part the dovish bias in global rate markets, with government bond yields in the US, UK, Germany and Japan continuing to slowly edge lower (see Figure 2). This trend in developed market yields is broadly in line with the view I expressed six weeks ago that skinny market pricing of policy rate hikes was probably appropriate (see Central banks – a muted second inflexion point, 14 July 2017).

 

Olivier Desbarres I know Fig 2

 

The fall in yields has been pervasive across the maturity spectrum and only Australian 2-year bond yields have risen (albeit by a paltry 2bps since mid-July – see Figure 3).

 

Olivier Desbarres I know Fig 3

Markets showing Teflon-like qualities but September may offer more acute test

There is also an argument to make that markets’ threshold for change is seemingly quiet high. The VIX equity volatility index temporarily spiked to 14 a few days ago but is now back on a 10-handle and the Dow Jones is grinding back higher. Sterling has been reasonably well behaved in the past week while the Euro, the poster-boy of developed currencies for the past five months, is struggling to extend its gains (in nominal effective exchange rate terms).

Event risk is clearly more acute in September, as central banks resume their policy meetings and parliaments return to work (see Figure 4). Even so, it is not obvious to me that major central banks will deliver the kind of surprises which cause major dislocations in financial markets. Lessons seem to have been learnt since the Fed’s 2013 so-called “taper tantrum” and I would expect central bankers to be particularly cautious in both their actions and words, forcing markets to focus on second or third derivatives.

 

 

The focus will be squarely on the European Central Bank (ECB) and US Federal Reserve meetings on 7th and 20th September, respectively, as central banks in the UK, Japan and Australia are seemingly content with doing very little at present.

 

European Central Bank sitting pretty for now

The ECB is ultimately in a pretty comfortable position, in my view, and can probably afford to do and say little next week. The Euro Nominal Effective Exchange Rate (NEER) has appreciated 5.5% since early May, which amounts to a tightening of monetary conditions and has led to speculation that the ECB will try to jawbone the Euro weaker. The minutes of the ECB’s 20th July policy meeting – which stated that “Concerns were expressed about a possible overshooting in the repricing by financial markets, notably the foreign exchange markets, in the future” were interpreted as evidence of a central bank keen to arrest the Euro’s appreciation.

But I am sticking to my view that the ECB is unlikely to actively talk down further modest Euro appreciation from current levels (see no UK rate hikes this year and room for further Euro upside 28 July 2017), highlighting five reasons. For starters, two key words stand out in the ECB statement: “possible” and “future”. That’s a far cry from saying that the Euro has already-overshot. It is also telling that ECB President Mario Draghi did not mention (directly or indirectly) Euro strength at the Jackson Hole meetings.

 

 

More fundamentally, financial conditions remain loose thanks to the fall in eurozone bond yields (see Figure 3) and decent performance of European equities. Fourth, eurozone macro indicators, including in Germany and France, are pointing in the right direction. Finally, the Euro NEER has been range-bound for the past few weeks (see Figure 5). While it has appreciated versus the Dollar and Sterling, it is down against the Chinese Renminbi (see Figure 6). The upshot in my view is that short of the ECB taking a sledgehammer to the Euro, I see the risk biased towards further EUR/USD and EUR/GBP upside in coming weeks.

French and German politics are unlikely to pose a significant risk to this constructive view of the Euro. President Emmanuel Macron presented on 31st August probably the most ambitious set of labour market reforms in decades which are due to come into effect via presidential decree in late-September. Resistance from the still powerful trade unions and opposition parties has so far been measured but history points to the risk of a more pronounced popular backlash in coming months. While this may further take the gloss off Macron’s presidency and dent his already faltering popularity, markets will have seen this all before so the bar has been set low for Macron.

German Chancellor Merkel is slowly gearing up towards federal elections in three weeks’ time. While the composition of the Bundestag, Germany’s house of parliament, may change to the detriment of Merkel’s Christian Democratic Union (CDU), she looks assured of a fourth consecutive term as I argued earlier this year (see Paradox of acute uncertainty and strong consensus views, 3 January 2017). Whether this is the optimal outcome for Germany is open to debate but markets are likely to welcome the political continuity.

 

Federal Reserve is elephant in the room but I expect EM markets to avoid stampede

The Fed has arguably a trickier set of conditions to navigate. GDP growth is strong, the labour market is nearing full employment but real wage growth remains modest and core inflation is falling. The quarter-on-quarter seasonally-adjusted and annualised growth in the US was revised upwards to 3% for Q2 2017, the fastest growth rate since Q1 2015 (see Figure 7). But as Figure 8 shows, three key measures of core inflation continued to fall in July. Some FOMC members are seemingly keen to look through the lack of inflationary pressures and there is scope for US macro data to surprise on the upside in coming weeks.

 

The bottom line is that I am sticking to my long-held view that the Fed will only hike its policy rate twice in 2017 (see Politics suspected of interfering with economics and markets, 19 May 2017). However, very skinny market pricing of 8-9bp of hikes for the remainder of the year may not sit that well with the FOMC. I would therefore expect some kind of verbal intervention by Chairperson Yellen and other FOMC members to push up market pricing closer to around 15bp to help keep the odds of a December rate hike alive.

While the economic impact of Hurricane Harvey remains difficult to estimate, precedent suggests that major hurricanes have not stopped the Federal Reserve from hiking policy rates. Moreover, the Fed has flagged that it would likely announce at its 20th September policy meeting the beginning of a reduction in its balance sheet (effectively not buying back maturing bonds).

If misjudged and/or ill-timed these announcements could cause wobbles in wider financial markets, including emerging market (EM) equities, bonds and currencies which are already having to deal with the fall in crude oil prices. The consensus seems to be siding with a potentially sharp correction in global equities and EM asset prices. I am somewhat more sanguine about Fed announcements causing a wholesale disruption in EM markets. Macro data out of China are pretty buoyant, EM inflation is falling overall which gives central banks some scope to cut interest rates if necessary while FX reserves (particularly in Non-Japan Asia) provide central banks some room to support their currencies if corrections are disorderly and/or sustained.

 

UK – Glacial pace of change

While May and June provided markets with plenty to ponder – including the ruling Conservatives’ botched general election and the slim possibility of the Bank of England (BoE) gearing towards a rate hike – the past couple of months have been low on excitement. I argued back in March that the BoE would not hike its policy rate this year and I have seen little evidence to change my view (see Bank of England and inflation – sense of déjà-vu?, 24 March 2017). GDP growth in coming quarters is unlikely to rise much from 0.55% in H1 2017 as growth in aggregate real weekly earnings remains turgid despite the record-low unemployment rate (see Figure 9).

The news flow on Brexit has somewhat cooled from the fever pitch earlier in the summer but two developments (or lack thereof) stand out. First and importantly, there is a now a seemingly solid consensus view among senior cabinet members, including Prime Minister Theresa May, that a transitional or implementation period would be required once the UK had left the EU in March 2019. Chancellor of the Exchequer Philip Hamond, Foreign Secretary Boris Johnson, Secretary of State for Exiting the EU David Davis, International Trade Secretary Liam Fox and Secretary of State for Environment Michael Gove have all in recent weeks given their backing for such an arrangement.

This is line with my expectation that a transitional agreement was the more likely outcome (See When two tribes go to war, 2 June 2017). Until recently the British government had repeatedly played down the need for such an agreement between the UK and EU. While the government’s position has yet to be formalised and finalised, markets have seemingly welcomed cabinet members’ meeting of minds. However, there is still much disagreement about a possible transitional agreement’s length and modalities, with estimates ranging from one to four years.

This uncertainty is being compounded by a lack of progress over the UK’s potential “divorce bill”. EU negotiators have repeatedly said that this stumbling block would delay the start of official negotiations over the terms and conditions of a new deal between the UK and EU.

Broken Records

The past year has been remarkable with political precedents set in the US, UK and France, still record-low central bank policy rates in most developed economies and financial markets and macro data at all-time or multi-year highs (and lows).

The US presidency is fraught with problems but markets are turning a blind eye…for now. The UK is still on course to be the first ever member state to leave the European Union come 29th March 2019, at least on paper. French elections have repainted the political landscape and present many opportunities but old (fiscal) hurdles still need to be cleared.

Central bank policy rates remain at record lows in the majority of developed economies, including the Eurozone, UK, Japan, Australia and New Zealand and I expect this to remain the case for the remainder of the year. Loose global monetary policy is likely to continue providing a floor to risky assets, including equities and emerging market currencies.

A number of central banks have hiked 25bp in recent months, including the Fed, BoC and CNB, in line with my year-old view that rate hikes would gradually replace rate cuts. But in aggregate the turnaround in developed central bank monetary policy is proceeding at a glacial pace and I see few reasons why this should change.

The Bank of England has not hiked its policy rate for 526 weeks – a domestic record – and I continue to believe that this stretch will extend into 2018.

In contrast to the Dollar and Sterling, the Euro – by far the most stable major currency in the past seven years – has appreciated over 7% since early April.

While the ECB may want to slow the current rapid pace of Euro appreciation, it is unlikely to stop, let alone reverse, the Euro’s upward path at this stage. For starters, Eurozone growth and labour markets continue to strengthen. The German IFO business climate index hit three consecutive record highs in June-August.

Perhaps the most obvious record which financial markets have broken is the continued climb in US equities to new highs and volatility’s fall to near-record lows.

Emerging market rates continue to edge lower in the face of receding inflationary risks and I see room for further rate cuts, particularly in Brazil given the pace of Real appreciation.

Non-Japan Asian (NJA) currencies continue to broadly tread water, in line with my core view that NJA central banks have little incentive to materially alter their currencies’ paths.

Year-to-date emerging market equities have rallied 24%, twice as fast as the Dow Jones (12%) which has rallied twice as fast as EM currencies versus the Dollar (6%). Read more

No UK rate hikes this year and room for further Euro upside

The odds of a 25bp Bank of England rate hike at next week’s policy meeting are all but dead in my view following tepid GDP growth of 0.3% qoq in Q2 2017.

Moreover, UK GDP growth and inflation dynamics, allied to forthcoming changes in the composition of the Monetary Policy Council, point to the record-low policy rate of 0.25% remaining on hold for the remainder of the year.

Forecasting European Central Bank (ECB) monetary policy, including the timing and modalities of changes to its Quantitative Easing program, is arguably a far trickier proposition.

While the ECB may be incentivised to slow the current rapid pace of Euro appreciation, at this stage I do not expect the ECB to try and to stop, let alone reverse, the Euro’s upward path.
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Central banks – A muted second inflexion point

Market focus has shifted from elections to central banks’ next steps

Financial markets, having digested the result of parliamentary and/or presidential elections in the US, Austria, Netherlands, France and UK and expecting German Chancellor Angela Merkel to win a fourth consecutive general election on 24th September, have turned their focus to global central bank policy. Specifically, it has centred on the possibility of tighter interest rate policy in developed economies in the form of rate hikes and/or modifications to central bank balance sheets or quantitative easing programs.

 

End-2016 proved to be an important inflexion point for global central bank policy

Up until the summer of 2016, developed central banks were still very much in monetary easing mode, with the exception of course of the Fed which had hiked its policy rate 25bp in December 2015. But eight years of ultra-low (and in some cases negative) central bank policy rates and expansive bond-buying programs had helped stabilise global growth and inflation, albeit at low levels. At the same time, the costs of ultra-loose monetary policy, including asset price bubbles, distortions in bond markets, pressure on the banking sector and even rising inequality, had started to outweigh the benefits.

This led to me to forecast that major central banks may refrain from loosening monetary policy further and that the ECB and BoE would keep the modalities of their QE programs broadly unchanged near term. At the very least I expected central bank policy rate cuts to become increasingly less frequent than in the past and that the world’s most influential central bankers would start tweaking a discourse which had in recent years largely focused on doing “whatever it takes” (see Global central bank easing nearing important inflexion point, 16 September 2016).

At the same time I argued that bar the Fed and possibly a handful of emerging market central banks still fighting weak currencies and high inflation, no major central bank was likely to hike policy rates or tighten monetary policy in the remainder of 2016 – that was a story for 2017, at the earliest.

 

This scenario has largely materialised, with the exception of the Reserve Bank of New Zealand delivering a final 25bp rate hike in November 2016.

  • Since then no developed central bank has cut its policy rate with a GDP-weighted average of policy rates bottoming out and more recently inching higher (see Figure 1).

 

olivier desbarres cb update fig 1

 

  • The only major central banks to have cut rates are the Central Bank of Russia and Banco Central do Brazil (see Figure 2). In May and June 2017 no major central bank cut its policy rate – the only other time this has happened in the past four years was in December 2016.

 

 

  • Central banks in Turkey and Mexico, in the face of still high inflation, have hiked their policy rates 50bp and 225bp respectively since August 2016.
  • The US Federal Reserve has already hiked rates 50bp this year and there has been growing talk of the Fed shrinking the size of its balance sheet.
  • This week the Bank of Canada hiked its policy rate (25bp) for the first time in nearly seven years.
  • Three out of eight members of the Monetary Policy Council of the Bank of England dissented in favour of a 25bp rate hike at the June policy meeting.
  • The European Central Bank has adopted a marginally more hawkish language in recent months. There is mounting expectation that the ECB will announce as early as September an extension of its quantitative easing program beyond-2017 but also a gradual tapering of the monthly amount of bonds purchased (from €60bn currently), with QE ending fully in late 2018 or early 2019.

 

This has led to growing speculation that we have reached a second inflexion point in developed central bank policy and one which could be sharp enough to dislocate global growth and asset markets, particularly in emerging economies. But financial markets, at present, expect only very marginal policy tightening by developed central banks. Specifically:

  • US Federal Reserve: Markets have all but priced out a September hike and are pricing in only another 12bp of hikes by year-end (i.e. a 50% probability of one more 25bp hike this year)
  • Bank of England: 12bp of hikes priced by year-end (i.e. a 50% probability of one hike this year)
  • Reserve Bank of Australia: No hikes priced in for the remainder of the year and only 15bp of hikes priced in for the next 12 months.
  • Bank of Canada: One more 25bp hike priced for this year.

This skinny market pricing of policy rate hikes is appropriate, in my view. At a global level, there are signs that GDP growth may have plateaued in Q2 2017 at around 3.1-3.2% year-on-year (see Figure 3), as I argued in H2 2017: Something old, something new, something revisited (23 June 2017).

 

 

Moreover, inflationary pressures remain muted in developed economies. Headline CPI-inflation in both developed and emerging market economies steadily rose between end-2015 and early 2017 but has since fallen (see Figure 4).

 

 

Perhaps more importantly, core CPI-inflation, which strips out food and fuel prices, has risen in emerging markets but after having flat-lined for years in major developed economies has in recent months dipped lower (see Figure 5). Only in the UK has core CPI-inflation risen and this is mainly attributable to higher imported inflation fuelled by the collapse in Sterling following the 23rd June 2016 EU referendum.

 

 

Moreover, in the US and Australia positive employment growth and very low unemployment rates continue to go hand in hand with only modest growth in real wages, while in the UK real wages are falling – an issue which I first identified in The common theme of low-wage growth, 10 February 2017). The inability of workers to command larger increases in nominal wages is acting as a break on both inflation expectations and consumer demand, and in turn is likely to curb underlying inflation going forward, in my view.

 

Bank of England – Policy rate to remain on hold in August and potentially rest of the year

The weakness of the UK economy and uncertainty associated with the Brexit process are high enough hurdles for the Bank of England (BoE) to refrain from hiking policy rates any time soon (see UK: Land of hope & glory…but mostly confusion, 7 July 2017).

I maintain my view that the BoE’s eight-member MPC is unlikely to hike its policy rate of 0.25% at its August meeting. While I expect MPC member Andrew Haldane to join Michael Saunders and Ian McCafferty in voting in favour of a 25bp hike, new member Silvana Tenreyro is likely to vote in favour of no change which would result in a 3 versus 5 vote in favour of rates remaining on hold. Importantly, I believe that Governor Carney – who has the casting vote in the event of a 4 versus 4 tie – will again vote for no change, even if he has had a tendency to blow hot and cold.

 

US Federal Reserve – Skip September meeting, keep December alive?

The US Federal Reserve has hiked its policy rate 50bp year-to-date but markets, which are pricing only 12bp of hikes for the remainder of the year, are clearly divided as to whether FOMC members will stick to their end-2016 forecast that three hikes would be appropriate in 2017. My core scenario remains that the Fed will not hike rates again in 2017 although this is a modest conviction call. While the labour market is inching towards full-employment, measures of US core inflation have fallen as pointed out by a number of FOMC members, including Chairperson Janet Yellen (see Figure 6).

 

 

The Reserve Bank of Australia has given every indication that it will remain pat on interest rate policy for the foreseeable future and while the Bank of Japan is prone to tweaking inflation targets and yield targets I do not foresee major policy changes at this juncture.

 

Olivier Desbarres

Olivier Desbarres currently works as an independent commentator on G10 and Emerging Markets. He has over 15 years’ experience with two of the world’s largest investment banks as an emerging markets economist, rates and currency strategist.

UK: Land of Hope & Glory…but mostly Confusion

The lyrics of Genesis’ 1986 hit “Land of Confusion” were penned over 30 years ago, with the English rock band satirising Ronald Reagan’s US presidency (see Figure 1). Specifically, they allude to the confusion fuelled by opportunist politicians in a fast-changing world beset by acute challenges. But, in my view, they portray with uncanny accuracy the UK in 2017 as Prime Minister Theresa May and her government, Parliament and the Bank of England feel their way towards Brexit. Read more

H2 2017: Something old, something new, something revisited

As we head towards the second half of 2017 and the one-year anniversary of the UK referendum on EU membership, many themes which have pre-occupied financial markets in the past 12 months are likely to continue dominating headlines.

These include Donald Trump’s US presidency and its longevity, merits and scope for tax reforms and infrastructural spending, Brexit negotiations which officially started on 19th June and the resilience of the ongoing recovery in global GDP growth.

Global GDP growth rose modestly in Q1 2017 to around 3.12% year-on-year from 3.06% in Q4 2016 and a multi-year low of 2.8% yoy in Q2 2016, according to my estimates.

But the global manufacturing PMI averaged 52.7 in April-May, down slightly from 52.9 in Q1 2017, suggesting global GDP growth may not have accelerated further in Q2. This could in turn, at the margin, delay or temper policy rate hikes and/or unwinding of QE programs.

Non-Japan Asian currencies have in the past month been even more stable than in the preceding month, in line with my expectations, but a more pronounced policy change – particularly in China – remains a possibility.

Other themes, such as the timing and magnitude of higher policy rates in developed economies and falling international oil prices, have recently come into clearer focus and will likely be of central importance in H2.

For the UK, I am sticking to my view that a 25bp policy rate hike this year is still a low probability event and I see little chance of an August hike.

The uncertainty over the MPC’s interest rate path and the government’s stance on Brexit complicate any forecast of Sterling near and medium-term but I continue to see the risks biased towards further depreciation.

In France, the hype surrounding Emmanuel Macron’s presidential and legislative election victories is already giving way to whether, when and how smoothly the LREM-MoDem rainbow government can push through its reformist agenda.

Finally, while most European elections are now thankfully behind us, European financial markets are likely to attach great importance to the outcome of Germany’s general election on 24th September.

Conversely, the burning topic of rising European nationalism and future of the eurozone/EU has lost traction following recent presidential and/or legislative elections in France, the UK, Netherlands and Austria. Read more

GBP – Hawkish Surprise Presents Selling Opportunity

Financial markets in the past week have had to contend with two UK-borne shocks: The ruling Conservative party’s loss of a majority in last Thursday’s general election and three MPC members voting in favour of a 25bp hike at today’s Bank of England policy meeting.

Sterling, which sold off sharply after the election result, has recovered this week and the more hawkish than expected MPC meeting has given the modest rally further impetus.

Confirmation of an alliance between the Conservatives and DUP, which is expected in coming days, may see Sterling strengthen further, particularly with markets digesting the implications of two further MPC members calling for higher rates.

This would, in my view, present an opportunity to short Sterling versus the dollar or euro, for five reasons:

  1. Conservative-DUP marriage is not one of choice and arguably not even one of convenience;
  2. Question of which type of Brexit is unlikely to be answered any time soon;
  3. MPC has become more hawkish but rate hike still unlikely near-term;
  4. Concerns over falling wages are at the heart of a UK economy which remains at best soft; and
  5. EU/eurozone growth slowly picking up and European nationalism on the back foot

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