April 26, 2023

Daily Report 26/04/2023

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There was no significant reaction to the latest UK government borrowing data with markets considering that the government was pledged to maintain a broadly credible fiscal policy. The CBI industrial orders index was unchanged at –20 in the latest month and in line with consensus forecasts. Bank of England Deputy Governor Broadbent stated that the bank would have raised interest rates quicker if it had seen inflation shocks coming. There were no comments on the outlook for monetary policy and interest rates. Bank chief economist Pill stated that the UK needed to accept that there would be a decline in living standards rather than attempting to maintain standards by pushing for higher wages and prices which would risk an inflationary spiral.

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The Euro was unable to make any headway after Tuesday’s European with the single currency sapped by weaker equities as risk appetite came under pressure. There was also underlying pressure for a correction after failing to post fresh 12-month highs against the US dollar.

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US consumer confidence retreated to a 9-month low of 101.3 for April from a revised 104.0 the previous month and below expectations of an unchanged reading for the month. There was a stronger reading for the current situation at 151.1 from 148.9, but this was more than offset by a sharp decline in the expectations component to 68.1 from 74.0. Consumers were less confident over the longer-term labour-market outlook and the overall expectations component remained consistent with recession conditions. There were some further reservations surrounding the economy after the US data, although the focus turned towards the banking sector. There were fresh concerns surrounding the US banking sector with a particular focus on First Republic. Its share prices posted sharp losses to record lows amid a large decline in deposits and there were fresh concerns surrounding the risk of contagion within the financial sector.

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13.30 Durable Goods Orders (Mar) Exp. 0.8% Prev. -1%
13.30 Nondefence Capital Goods Orders ex Aircraft (Mar) Exp. 0.2% Prev. -0.1%