The euro lost out against the dollar last week despite the ECB’s hawkish hold on Thursday, where they warned of upside risks to inflation and the market pricing in a 90% chance of a 25bps hike at their next meeting. That wasn’t enough to offset the impact of continued safe-haven demand for the dollar amid the tensions and conflict in the Middle East and concerns that energy prices will stay elevated for longer and damage Euro Area growth prospects. The euro started off last week at $1.1440 but ended Friday at just below $1.1380, however news of a pause in US strikes against Iran has helped the euro this morning and it has returned to back above $.1.14 currently. A new UK Prime Minister did little to help sterling, which lost some ground to the euro and dollar last week. It’s trading at 85.4p to the single currency and around $1.3350 to the American currency.
Yesterdays Events
Government bond yields edged lower on Friday, but that was following rises during the week as markets firmed up expectations of interest rate hikes amid the fallout from the war in Iran and rising energy prices. US 10-year yields were down 2bps for the day but up 13bps for the week to 4.68%. Similarly, at the shorter end of the curve, 2-year US yields were up 15bps for the week to 4.33%. In Europe, 10-year bund yields were down 3bps on Friday but up 5bps overall for the week at 3.17%, while UK 10-year gilt yields were down 7bps on Friday but still up 8bps for the week and at 5.03%, having closed above 5% for the first time since May. Bonds are, however, rallying this morning on the hopes for a ceasefire in the Middle East with yields down on both sides of the Atlantic. It was a mixed week for equities, with the S&P recovering from a dip on Thursday to close up on Friday but nevertheless losing 0.6% for the week, its second consecutive weekly fall. The concerns over the financial sustainability of AI and related capital expenditure remain the driver, with the NASDAQ down 1.6% for the week, its third weekly fall in five weeks, and now down 8% from its early June peak.
Oil prices saw further gains last week amid the escalating conflict in Iran with Brent crude back above $100 a barrel at one point for the first time since mid-May, but there is more positive news this morning with the US having paused strikes against Iran for a second night and Iranian signaling they are holding back on retaliation. Brent has fallen back as a result and is trading this morning at just under $91/barrel but the situation remains fluid with a lasting peace in the conflict still far from secure at this point.
The flash PMIs for July in the Euro Area and UK surprised to the upside. The composite for the Euro Area came in at 51.9, up from 50.1 in June, while the UK composite rose to 52.1 from 50.3. In both economies, manufacturing and services are in expansionary territory and getting back to levels not seen since before the Iran war, while new orders and incoming business readings also improved. The US PMI was also positive, with the composite rising to 53.6, the highest in eight months, with services rising to 53.6 helped by World Cup activity. Manufacturing, at 53.8, also pointed to expansion but was slightly under the consensus forecast, while indices associated with prices – prices charged and output prices – picked up notably to the highest readings seen since August 2022.
The Day Ahead
Big week for monetary policy watchers this week following the ECB staying on hold last week, as we have the Federal Reserve FOMC conclusion on Wednesday. A hold is expected, with about a 35% chance of a hike, but we may see more hawkish noises from them – or maybe less noise of any kind as new Fed Chair Warsh favours less rather than more communication. We get the Bank of England MPC on Thursday; again, a hold is expected with only a 5% chance of a hike, while further afield the BOJ meets on Friday with a less than 5% chance of a move from them either, but the market is watching for any hawkish signal. On the data front, we get preliminary Q2 GDP data in the US and Euro Area, and PCE in the US, and flash inflation for July in the Euro Area.
Author: Feidhlim Glennon
Tel: 1800 30 30 03 / +353 (0)1 790 0000
27 Jul 2026
Todays Talking Points 24.07.26
Market Commentary
A continuing rise in global energy prices contributed to higher bond yields, weaker equity markets – with AI-related concerns also weighing on stocks – and a firmer dollar. The ECB left interest rates unchanged, as expected, but warned of upside risks to the inflation outlook, keeping intact market expectations that it will most probably hike rates at its next meeting in September and again before the end of the year. The euro has weakened to under $1.14 against the dollar, leaving it not much more than half a cent above its 2026-to-date lows of around $1.1325 reached in June. Sterling has lost ground to both the dollar and the euro, trading at circa $1.3340 and £0.8545 respectively (the latter off levels of around £0.8450 a week ago), albeit stronger than expected UK retail sales data released a short while ago are providing some support for the pound this morning.
Yesterdays Events
With oil prices climbing to over $100 per barrel (in the case of Brent), government bond yields continued to head north, rising by 3-7bps in the main markets, with the short-end of curves tending to see the biggest increase in yields amid a firming of expectations for central bank rate hikes. Looking out to the middle of next year, around 70bps of hikes are now priced in for both the ECB and Bank of England, and around 60bps for the Fed, some 10-15bps more than was the case at the end of last week. Equity markets sold off quite a bit yesterday, shedding 1-2% on the day, with higher energy prices and AI concerns weighing on stocks.
As expected, the ECB left interest rates unchanged following yesterday’s meeting. It noted that “uncertainty remains high and the full inflationary impact of the energy shock has yet to play out,” and said it is “closely monitoring the intensity and duration of the shock, as well as its indirect and second-round effects”. Christine Lagarde revealed that some members “asked whether we should not consider a hike today (but) we all unanimously decided that we were positioned adequately to wait and be very attentive in the next few weeks to the development of the situation and to the data that we will be receiving in the next few weeks” (ahead of the next meeting in September).
Retail sales volumes in the UK rose by 1.0% in June, following an increase of 1.2% in May, with “promotions and the warm weather” boosting spending in the month. For Q2 as a whole, retail sales grew by 0.6%, easing from growth of almost 1.5% in the first quarter of the year.
The Day Ahead
Looking to the day ahead, economic data due include flash PMIs for July in the main economies (Euro area, UK, and US) and new home sales in the US, while the ECB releases its June survey of consumers short- and medium term inflation expectations.
Author: Feidhlim Glennon
Tel: 1800 30 30 03 / +353 (0)1 790 0000
23 Jul 2026
Todays Talking Points 23.07.26
Market Commentary
The euro is largely treading water ahead of the ECB’s latest interest rate decision later today. While it seems set to leave the deposit rate unchanged at 2.25%, it is likely to keep open the prospect of a further hike (following the 25bps increase in June) given the renewed rise in oil and gas prices recently, which will maintain the pressure on inflation. Currently, the market is almost as good as pricing in a 25bps increase by September and the best part of another quarter-point hike by the end of this year. EURUSD and EURGBP are trading at around $1.1425 and £0.8540 respectively, marginally firmer than this time yesterday morning, while GBPUSD continues to hover just below the $1.34 level.
Yesterdays Events
Government bond yields edged higher on the day, mainly at the short end of curves with 2-year yields increasing by 3-4bps across the main markets (US Treasuries leading the way) as central bank hike expectations firmed amid rising energy prices. European stocks reversed early losses to close with gains of around 0.5% but US stocks sold off late on to end marginally lower overall, while the futures market points to a weak opening for both today.
While oil prices continue to creep higher – Brent crude is trading just shy of $97 per barrel this morning, bringing the cumulative increase from the early July lows to $25 – there has been a notable jump in European gas prices lately. They are now at new highs since the Iran war began at the end of February, and are up almost 65% from their lows in June.
The Day Ahead
As well as the ECB rate announcement, economic data due today include the European Commission’s indicator of Euro area consumer confidence (for July), the CBI’s business optimism index (July) in the UK, and the regular weekly jobless claims release in the US.
Author: Feidhlim Glennon
Tel: 1800 30 30 03 / +353 (0)1 790 0000
Todays Talking Points 22.07.26
Market Commentary
Sterling came under some pressure during yesterday’s session, seemingly related to concerns around the funding (or not) of the new UK government’s planned cut in VAT on electricity bills. The pound is down at around $1.3390 and £0.8525 versus the dollar and euro respectively this morning, though slightly softer than expected (UK) inflation data released a short while ago are having little impact on the currency. Elsewhere, the euro is managing to hold above the $1.14 level against the dollar (trading at about $1.1415), albeit it threatened to break below it during yesterday’s session, while the yen has fallen to fresh multi-decade lows of over Y163 against the US currency, carrying with it the threat of official intervention to stem its decline.
Yesterdays Events
US government bonds yields edged higher again yesterday, increasing by 3-5bps across the curve, providing support for the dollar, while German yields were largely unchanged. UK bonds outperformed, notwithstanding the pressure on sterling, ending slightly lower on the day. Equity markets had a positive session, even as oil prices moved back up again, with both US and European stocks gaining around 1%. Oil prices area heading further north this morning though – Brent crude is now trading above $93 per barrel, its highest level since mid-June – which may weigh on markets today.
Headline CPI inflation in the UK fell to 2.6% in June, from 2.8% in May, according to date released earlier this morning, a touch lower than the 2.7% reading expected by the consensus. Last month’s fall was due to a decline in both energy and food price inflation, while core inflation (which excludes energy and food prices) was unchanged at 2.6%, with core goods inflation remaining at 0.7% and core services inflation nudging down to 3.6%. Headline inflation is now almost half a percentage point lower than before the war in Iran (it stood at 3% in February), but it will almost certainly move up in July as an increase in domestic energy bills (announced by the regulator a while back) kicks in. There’s a good chance though that March’s reading of 3.3% will prove to be the peak in inflation.
The Day Ahead
It is extremely quiet in terms of economic data for the remainder of the day, with little or nothing of note due for release. At least there is the ECB meeting tomorrow though!
Author: Feidhlim Glennon
Tel: 1800 30 30 03 / +353 (0)1 790 0000
21 Jul 2026
Todays Talking points 21.07.26
Market Commentary
The euro and sterling are just marginally lower against the dollar relative to yesterday morning’s levels trading at around $1.1425 and $1.3440 respectively, while EURGBP is largely unchanged hovering just below the £0.85 level. Prime Minister Burnham’s pick as Chancellor – John Healey – was certainly a surprise but UK markets are unfazed judging by their (non) reaction this morning (he is being described as a “safe pair of hands”). UK labour market data published a short while ago were in line with expectations, hence leaving the pound unmoved.
Yesterdays Events
US government bond yields edged up by 3-5bps, albeit finishing off the highs for the day as US stocks sold off into the close, while German yields were flat to marginally higher. UK bonds underperformed, with yields rising by 6-8bps, after comments by PM Burnham, that he would “use any flexibility” available within the fiscal rules, caused some concern in the gilts market. In equity markets, European and US stocks both ended slightly lower on the day. Asian markets had a positive session overnight though (Japan’s Nikkei index was up more than 3%), which should spill over into European indices at the open this morning.
UK labour market data released earlier this morning were in line with expectations. Employment rose by 0.4% in the three months to May (versus the three months to February) according to the Labour Force Survey, while the unemployment rate held steady over this period at 4.9%. Underlying weekly earnings growth (i.e. excluding bonuses) was unchanged at 3.4% year-on-year across the economy, though it did nudge down to 2.9% y-o-y in the private sector, which will be very much welcomed by the Bank of England. Separately, the new Chancellor, John Healey, has announced a temporary reduction in VAT on domestic electricity bills from 5% to 0%, effective from October, to be funded by the scrapping of the digital ID scheme.
The Day Ahead
It is very quiet for the rest of the day in terms of economic data, with the ZEW investor sentiment index in Germany/Euro area and the ADP weekly employment report in US the only releases scheduled.
Author: Feidhlim Glennon
Tel: 1800 30 30 03 / +353 (0)1 790 0000
Todays Talking Points 20.07.26
Market Commentary
Oil prices have headed north at the start of the week amid escalating hostilities between the US and Iran. Brent crude has risen to over $90 per barrel, bringing the cumulative increase over the past couple of weeks to around $20. Central bank interest rate expectations have hardened over the same period with the market pricing in an additional 25bps or so of hikes from the ECB and Bank of England by the end of this year. The ECB is expected to leave rates unchanged (at 2.25%) at this Thursday’s meeting though, albeit a 25bps increase is almost fully priced in for the following meeting in September when there will be updated inflation and growth forecasts to hand. In FX, the euro and sterling are holding in relatively well against the dollar notwithstanding recent geopolitical developments. Both gained some modest ground against the US currency last week and are trading at about $1.1450 and $1.3470 respectively this morning, while EURGBP is hovering around the £0.85 level. UK markets will be focused on political developments today as Andy Burnham becomes Prime Minister and announces his ‘pick’ as Chancellor of the Exchequer. There are also some important economic data due in the UK this week, including the latest labour market report tomorrow and CPI inflation for June on Wednesday.
Yesterdays Events
German and UK government bond yields backed up last week, amid rising oil prices and hardening rate hike expectations, with 2-year yields increasing by the best part of 15bps. In contrast, US yields fell slightly on the week as softer than expected CPI and PPI inflation data led to some easing on Fed rate expectations (though the market is still pricing in more than 30bps of hikes by year-end). Meanwhile, equity markets remained under pressure on Friday with the Euro Stoxx 600 shedding almost 0.5% and the S&P 500 closing 1% lower on the day.
Fed member Hammack says “there is no conflict” in the central bank’s dual mandate, noting that “inflation is too high” and that, “for the first time in my tenure, I’m hearing from businesses who say they think we need to take action to curb inflation.”
The Day Ahead
In terms of economic data for the week ahead, as well as the UK labour market and inflation reports (Tuesday and Wednesday respectively), the other main releases of note are the flash PMIs for July in the main economies (Euro area, US and UK) and the ECB’s latest survey of consumer inflation expectations, all due on Friday.
Author: Feidhlim Glennon
Tel: 1800 30 30 03 / +353 (0)1 790 0000
17 Jul 2026
Todays Talking Points 17.07.26
Market Commentary
Sterling has given up a good chunk of its mid-week gains against the dollar and the euro, retreating to around $1.3470 and £0.85 respectively (from earlier highs of around $1.3560 and £0.8455). The euro is holding above the $1.14 level against the US currency, having dipped below this level at the beginning of the week, trading at around $1.1450. Oil prices remain off their recent highs, with Brent crude trading just below $85 per barrel, but Asian equities were a good bit lower overnight, led by falls in technology stocks, which is spilling over into European markets at the open this morning.
Yesterdays Events
US government bond yields edged up, having falling quite sharply over the previous couple of sessions, helped by some solid (US) economic data, while German and UK yields followed suit, ending a couple of basis points higher on the day. In equity markets, European stocks ended with modest gains but US indices sold off into the close, led by the Nasdaq which shed almost 2%.
Fed member Logan calls for “modestly higher interest rates,” saying that “inflation has been too high, for too long, and does not appear to be on track all the way back to 2 percent,” with risks to the inflation outlook “to the upside.”
Bank of England MPC memberBreeden says “we have a softish (UK) economic outlook; we have slack in the labour market…those two things mean that that the (energy price) shock is less likely to become embedded and lead to inflationary dynamics that we might need to lean against (by raising interest rates).”
The Day Ahead
For the day ahead, economic data due include the University of Michigan consumer confidence/inflation expectations survey (July), industrial production (June) and import prices (June) in the US, and a final reading for CPI inflation in June in the Euro area (the ‘flash’ reading showed headline inflation fell to 2.8% last month from 3.2% in May).
Dealer Comments
Todays Talking Points 27.07.26
Market Commentary
The euro lost out against the dollar last week despite the ECB’s hawkish hold on Thursday, where they warned of upside risks to inflation and the market pricing in a 90% chance of a 25bps hike at their next meeting. That wasn’t enough to offset the impact of continued safe-haven demand for the dollar amid the tensions and conflict in the Middle East and concerns that energy prices will stay elevated for longer and damage Euro Area growth prospects. The euro started off last week at $1.1440 but ended Friday at just below $1.1380, however news of a pause in US strikes against Iran has helped the euro this morning and it has returned to back above $.1.14 currently. A new UK Prime Minister did little to help sterling, which lost some ground to the euro and dollar last week. It’s trading at 85.4p to the single currency and around $1.3350 to the American currency.
Yesterdays Events
Government bond yields edged lower on Friday, but that was following rises during the week as markets firmed up expectations of interest rate hikes amid the fallout from the war in Iran and rising energy prices. US 10-year yields were down 2bps for the day but up 13bps for the week to 4.68%. Similarly, at the shorter end of the curve, 2-year US yields were up 15bps for the week to 4.33%. In Europe, 10-year bund yields were down 3bps on Friday but up 5bps overall for the week at 3.17%, while UK 10-year gilt yields were down 7bps on Friday but still up 8bps for the week and at 5.03%, having closed above 5% for the first time since May. Bonds are, however, rallying this morning on the hopes for a ceasefire in the Middle East with yields down on both sides of the Atlantic. It was a mixed week for equities, with the S&P recovering from a dip on Thursday to close up on Friday but nevertheless losing 0.6% for the week, its second consecutive weekly fall. The concerns over the financial sustainability of AI and related capital expenditure remain the driver, with the NASDAQ down 1.6% for the week, its third weekly fall in five weeks, and now down 8% from its early June peak.
Oil prices saw further gains last week amid the escalating conflict in Iran with Brent crude back above $100 a barrel at one point for the first time since mid-May, but there is more positive news this morning with the US having paused strikes against Iran for a second night and Iranian signaling they are holding back on retaliation. Brent has fallen back as a result and is trading this morning at just under $91/barrel but the situation remains fluid with a lasting peace in the conflict still far from secure at this point.
The flash PMIs for July in the Euro Area and UK surprised to the upside. The composite for the Euro Area came in at 51.9, up from 50.1 in June, while the UK composite rose to 52.1 from 50.3. In both economies, manufacturing and services are in expansionary territory and getting back to levels not seen since before the Iran war, while new orders and incoming business readings also improved. The US PMI was also positive, with the composite rising to 53.6, the highest in eight months, with services rising to 53.6 helped by World Cup activity. Manufacturing, at 53.8, also pointed to expansion but was slightly under the consensus forecast, while indices associated with prices – prices charged and output prices – picked up notably to the highest readings seen since August 2022.
The Day Ahead
Big week for monetary policy watchers this week following the ECB staying on hold last week, as we have the Federal Reserve FOMC conclusion on Wednesday. A hold is expected, with about a 35% chance of a hike, but we may see more hawkish noises from them – or maybe less noise of any kind as new Fed Chair Warsh favours less rather than more communication. We get the Bank of England MPC on Thursday; again, a hold is expected with only a 5% chance of a hike, while further afield the BOJ meets on Friday with a less than 5% chance of a move from them either, but the market is watching for any hawkish signal. On the data front, we get preliminary Q2 GDP data in the US and Euro Area, and PCE in the US, and flash inflation for July in the Euro Area.
27 Jul 2026
Todays Talking Points 24.07.26
Market Commentary
A continuing rise in global energy prices contributed to higher bond yields, weaker equity markets – with AI-related concerns also weighing on stocks – and a firmer dollar. The ECB left interest rates unchanged, as expected, but warned of upside risks to the inflation outlook, keeping intact market expectations that it will most probably hike rates at its next meeting in September and again before the end of the year. The euro has weakened to under $1.14 against the dollar, leaving it not much more than half a cent above its 2026-to-date lows of around $1.1325 reached in June. Sterling has lost ground to both the dollar and the euro, trading at circa $1.3340 and £0.8545 respectively (the latter off levels of around £0.8450 a week ago), albeit stronger than expected UK retail sales data released a short while ago are providing some support for the pound this morning.
Yesterdays Events
With oil prices climbing to over $100 per barrel (in the case of Brent), government bond yields continued to head north, rising by 3-7bps in the main markets, with the short-end of curves tending to see the biggest increase in yields amid a firming of expectations for central bank rate hikes. Looking out to the middle of next year, around 70bps of hikes are now priced in for both the ECB and Bank of England, and around 60bps for the Fed, some 10-15bps more than was the case at the end of last week. Equity markets sold off quite a bit yesterday, shedding 1-2% on the day, with higher energy prices and AI concerns weighing on stocks.
As expected, the ECB left interest rates unchanged following yesterday’s meeting. It noted that “uncertainty remains high and the full inflationary impact of the energy shock has yet to play out,” and said it is “closely monitoring the intensity and duration of the shock, as well as its indirect and second-round effects”. Christine Lagarde revealed that some members “asked whether we should not consider a hike today (but) we all unanimously decided that we were positioned adequately to wait and be very attentive in the next few weeks to the development of the situation and to the data that we will be receiving in the next few weeks” (ahead of the next meeting in September).
Retail sales volumes in the UK rose by 1.0% in June, following an increase of 1.2% in May, with “promotions and the warm weather” boosting spending in the month. For Q2 as a whole, retail sales grew by 0.6%, easing from growth of almost 1.5% in the first quarter of the year.
The Day Ahead
Looking to the day ahead, economic data due include flash PMIs for July in the main economies (Euro area, UK, and US) and new home sales in the US, while the ECB releases its June survey of consumers short- and medium term inflation expectations.
23 Jul 2026
Todays Talking Points 23.07.26
Market Commentary
The euro is largely treading water ahead of the ECB’s latest interest rate decision later today. While it seems set to leave the deposit rate unchanged at 2.25%, it is likely to keep open the prospect of a further hike (following the 25bps increase in June) given the renewed rise in oil and gas prices recently, which will maintain the pressure on inflation. Currently, the market is almost as good as pricing in a 25bps increase by September and the best part of another quarter-point hike by the end of this year. EURUSD and EURGBP are trading at around $1.1425 and £0.8540 respectively, marginally firmer than this time yesterday morning, while GBPUSD continues to hover just below the $1.34 level.
Yesterdays Events
Government bond yields edged higher on the day, mainly at the short end of curves with 2-year yields increasing by 3-4bps across the main markets (US Treasuries leading the way) as central bank hike expectations firmed amid rising energy prices. European stocks reversed early losses to close with gains of around 0.5% but US stocks sold off late on to end marginally lower overall, while the futures market points to a weak opening for both today.
While oil prices continue to creep higher – Brent crude is trading just shy of $97 per barrel this morning, bringing the cumulative increase from the early July lows to $25 – there has been a notable jump in European gas prices lately. They are now at new highs since the Iran war began at the end of February, and are up almost 65% from their lows in June.
The Day Ahead
As well as the ECB rate announcement, economic data due today include the European Commission’s indicator of Euro area consumer confidence (for July), the CBI’s business optimism index (July) in the UK, and the regular weekly jobless claims release in the US.
Todays Talking Points 22.07.26
Market Commentary
Sterling came under some pressure during yesterday’s session, seemingly related to concerns around the funding (or not) of the new UK government’s planned cut in VAT on electricity bills. The pound is down at around $1.3390 and £0.8525 versus the dollar and euro respectively this morning, though slightly softer than expected (UK) inflation data released a short while ago are having little impact on the currency. Elsewhere, the euro is managing to hold above the $1.14 level against the dollar (trading at about $1.1415), albeit it threatened to break below it during yesterday’s session, while the yen has fallen to fresh multi-decade lows of over Y163 against the US currency, carrying with it the threat of official intervention to stem its decline.
Yesterdays Events
US government bonds yields edged higher again yesterday, increasing by 3-5bps across the curve, providing support for the dollar, while German yields were largely unchanged. UK bonds outperformed, notwithstanding the pressure on sterling, ending slightly lower on the day. Equity markets had a positive session, even as oil prices moved back up again, with both US and European stocks gaining around 1%. Oil prices area heading further north this morning though – Brent crude is now trading above $93 per barrel, its highest level since mid-June – which may weigh on markets today.
Headline CPI inflation in the UK fell to 2.6% in June, from 2.8% in May, according to date released earlier this morning, a touch lower than the 2.7% reading expected by the consensus. Last month’s fall was due to a decline in both energy and food price inflation, while core inflation (which excludes energy and food prices) was unchanged at 2.6%, with core goods inflation remaining at 0.7% and core services inflation nudging down to 3.6%. Headline inflation is now almost half a percentage point lower than before the war in Iran (it stood at 3% in February), but it will almost certainly move up in July as an increase in domestic energy bills (announced by the regulator a while back) kicks in. There’s a good chance though that March’s reading of 3.3% will prove to be the peak in inflation.
The Day Ahead
It is extremely quiet in terms of economic data for the remainder of the day, with little or nothing of note due for release. At least there is the ECB meeting tomorrow though!
21 Jul 2026
Todays Talking points 21.07.26
Market Commentary
The euro and sterling are just marginally lower against the dollar relative to yesterday morning’s levels trading at around $1.1425 and $1.3440 respectively, while EURGBP is largely unchanged hovering just below the £0.85 level. Prime Minister Burnham’s pick as Chancellor – John Healey – was certainly a surprise but UK markets are unfazed judging by their (non) reaction this morning (he is being described as a “safe pair of hands”). UK labour market data published a short while ago were in line with expectations, hence leaving the pound unmoved.
Yesterdays Events
US government bond yields edged up by 3-5bps, albeit finishing off the highs for the day as US stocks sold off into the close, while German yields were flat to marginally higher. UK bonds underperformed, with yields rising by 6-8bps, after comments by PM Burnham, that he would “use any flexibility” available within the fiscal rules, caused some concern in the gilts market. In equity markets, European and US stocks both ended slightly lower on the day. Asian markets had a positive session overnight though (Japan’s Nikkei index was up more than 3%), which should spill over into European indices at the open this morning.
UK labour market data released earlier this morning were in line with expectations. Employment rose by 0.4% in the three months to May (versus the three months to February) according to the Labour Force Survey, while the unemployment rate held steady over this period at 4.9%. Underlying weekly earnings growth (i.e. excluding bonuses) was unchanged at 3.4% year-on-year across the economy, though it did nudge down to 2.9% y-o-y in the private sector, which will be very much welcomed by the Bank of England. Separately, the new Chancellor, John Healey, has announced a temporary reduction in VAT on domestic electricity bills from 5% to 0%, effective from October, to be funded by the scrapping of the digital ID scheme.
The Day Ahead
It is very quiet for the rest of the day in terms of economic data, with the ZEW investor sentiment index in Germany/Euro area and the ADP weekly employment report in US the only releases scheduled.
Todays Talking Points 20.07.26
Market Commentary
Oil prices have headed north at the start of the week amid escalating hostilities between the US and Iran. Brent crude has risen to over $90 per barrel, bringing the cumulative increase over the past couple of weeks to around $20. Central bank interest rate expectations have hardened over the same period with the market pricing in an additional 25bps or so of hikes from the ECB and Bank of England by the end of this year. The ECB is expected to leave rates unchanged (at 2.25%) at this Thursday’s meeting though, albeit a 25bps increase is almost fully priced in for the following meeting in September when there will be updated inflation and growth forecasts to hand. In FX, the euro and sterling are holding in relatively well against the dollar notwithstanding recent geopolitical developments. Both gained some modest ground against the US currency last week and are trading at about $1.1450 and $1.3470 respectively this morning, while EURGBP is hovering around the £0.85 level. UK markets will be focused on political developments today as Andy Burnham becomes Prime Minister and announces his ‘pick’ as Chancellor of the Exchequer. There are also some important economic data due in the UK this week, including the latest labour market report tomorrow and CPI inflation for June on Wednesday.
Yesterdays Events
German and UK government bond yields backed up last week, amid rising oil prices and hardening rate hike expectations, with 2-year yields increasing by the best part of 15bps. In contrast, US yields fell slightly on the week as softer than expected CPI and PPI inflation data led to some easing on Fed rate expectations (though the market is still pricing in more than 30bps of hikes by year-end). Meanwhile, equity markets remained under pressure on Friday with the Euro Stoxx 600 shedding almost 0.5% and the S&P 500 closing 1% lower on the day.
Fed member Hammack says “there is no conflict” in the central bank’s dual mandate, noting that “inflation is too high” and that, “for the first time in my tenure, I’m hearing from businesses who say they think we need to take action to curb inflation.”
The Day Ahead
In terms of economic data for the week ahead, as well as the UK labour market and inflation reports (Tuesday and Wednesday respectively), the other main releases of note are the flash PMIs for July in the main economies (Euro area, US and UK) and the ECB’s latest survey of consumer inflation expectations, all due on Friday.
17 Jul 2026
Todays Talking Points 17.07.26
Market Commentary
Sterling has given up a good chunk of its mid-week gains against the dollar and the euro, retreating to around $1.3470 and £0.85 respectively (from earlier highs of around $1.3560 and £0.8455). The euro is holding above the $1.14 level against the US currency, having dipped below this level at the beginning of the week, trading at around $1.1450. Oil prices remain off their recent highs, with Brent crude trading just below $85 per barrel, but Asian equities were a good bit lower overnight, led by falls in technology stocks, which is spilling over into European markets at the open this morning.
Yesterdays Events
US government bond yields edged up, having falling quite sharply over the previous couple of sessions, helped by some solid (US) economic data, while German and UK yields followed suit, ending a couple of basis points higher on the day. In equity markets, European stocks ended with modest gains but US indices sold off into the close, led by the Nasdaq which shed almost 2%.
Fed member Logan calls for “modestly higher interest rates,” saying that “inflation has been too high, for too long, and does not appear to be on track all the way back to 2 percent,” with risks to the inflation outlook “to the upside.”
Bank of England MPC member Breeden says “we have a softish (UK) economic outlook; we have slack in the labour market…those two things mean that that the (energy price) shock is less likely to become embedded and lead to inflationary dynamics that we might need to lean against (by raising interest rates).”
The Day Ahead
For the day ahead, economic data due include the University of Michigan consumer confidence/inflation expectations survey (July), industrial production (June) and import prices (June) in the US, and a final reading for CPI inflation in June in the Euro area (the ‘flash’ reading showed headline inflation fell to 2.8% last month from 3.2% in May).