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On May 12th, ING strategists stated in a report that the rise in UK 2-year gilt yields was primarily due to political tensions and high oil prices, leading investors to increasingly doubt the Bank of Englands ability to cut interest rates in the coming years. They noted that this shift is also related to market expectations: if Starmer steps down, fiscal spending could expand and government debt could rise under a new prime minister, further pushing up interest rate expectations. Prime Minister Starmer is currently facing significant pressure to resign due to the Labour Partys poor performance in last weeks local elections. The UK money market is already pricing in two to three interest rate hikes in 2026 due to persistently high inflation.On May 12th, Anta Sports (02020.HK) announced on the Hong Kong Stock Exchange an adjustment to the conversion price of its €1.5 billion zero-coupon guaranteed convertible bonds maturing in 2029. In accordance with the terms and conditions of the bonds and due to the approval of a dividend by shareholders at the companys Annual General Meeting to be held on May 12, 2026, the conversion price will be adjusted from HK$101.13 to HK$99.80. The adjustment will take effect on May 19, 2026. Except for the adjustment, all other terms and conditions of the bonds remain unchanged.Futures News, May 12th: 1. Today, the spot price of Guangxi white sugar was 5406 yuan/ton, up 22 yuan/ton; Guangxi Sugar Groups quoted price range was 5400-5490 yuan/ton, up 20-30 yuan/ton; Yunnan Sugar Groups quoted price was 5210-5270 yuan/ton, up 20 yuan/ton; the mainstream quoted price range of sugar mills was 5800-5950 yuan/ton, with some up 20-60 yuan/ton. Both spot and futures prices strengthened, driven by the "buy high, sell low" mentality, leading to continued increased trading activity. 2. The US-Iran ceasefire agreement appeared somewhat fragile, with crude oil prices rising nearly 5% intraday, subsequently driving up international sugar prices. ICE raw sugar futures finally closed at 14.95 cents/lb, up 0.26 cents/lb. Current energy prices remain high, and with international sugar prices climbing again to around 15 cents/lb, the ethanol-to-sugar premium has somewhat declined. In the short term, attention should be paid to whether the latest sugar production ratio data for south-central Brazil will be adjusted. 3. Zhengzhou sugar futures contract SR2609 continued its range-bound consolidation in overnight trading. During the day, driven by the recovery in the commodity market, prices fluctuated upwards, breaking through the 5500 yuan/ton mark, before turning to range-bound trading, closing at 5504 yuan/ton, up 27 yuan/ton. Open interest increased by 8,700 lots during the day. The battle between bulls and bears continues, and Zhengzhou sugar futures prices are likely to maintain a range-bound trading pattern in the short term.Market news: The Securities and Exchange Commission of India has proposed the introduction of physically settled agricultural commodity derivatives (contracts).On May 12, local time, the Israel Defense Forces (IDF) stated that it intercepted a drone launched from eastern Israel that afternoon. The interception did not trigger air raid sirens within Israel. According to Israeli sources, the drone was intercepted near the southern city of Eilat, marking the first drone attack on Eilat since the temporary ceasefire between the United States and Iran took effect.

The EUR/GBP exchange rate recovers above 0.8000 in advance of Eurozone inflation and UK gross domestic product

Alina Haynes

Mar 30, 2023 16:05

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The EUR/GBP pair extended its recovery above 0.88 during the Asian trading session. Anticipating that the European Central Bank (ECB) will continue to raise interest rates to combat persistent inflation, the cross has depreciated progressively. Friday will see the publication of preliminary Eurozone Harmonized Index of Consumer Prices (HICP) and Gross Domestic Product (GDP) (Q4) figures. Prior to the publication of these figures, it is anticipated that the asset will exhibit explosive activity.

 

It is anticipated that the preliminary Eurozone HICP will decelerate significantly from 8.5% to 7.3%. While it is anticipated that the core HICP will rise to 5.7% from 5.6% in the previous release. Weak energy prices are anticipated to have a significant impact on Eurozone inflation. In light of Christine Lagarde's prediction that inflation will remain elevated for an extended period of time, the European Central Bank (ECB) is expected to continue tightening monetary policy.

 

In the interim, banking tensions are subsiding as the absence of information regarding additional collateral damage has a positive impact on the market. Chief Economist Philip Lane stated on Wednesday that ECB interest rates must rise if banking tension has no or a "relatively limited" impact.

 

Investors avidly anticipate the United Kingdom's Gross Domestic Product (GDP) data. According to the consensus, the United Kingdom's growth in the fourth quarter of CY2022 remained unchanged. It is anticipated that the annual GDP will remain unchanged at 0.4%. It is expected that the British economy will undergo a severe recession as a result of high inflation and sluggish growth.

 

The Bank of England (BoE) policymakers appear confident that inflation will moderate in the near future and that the unexpected rise in February's inflation was a one-time anomaly; however, the absence of evidence raises doubts. If inflation persists, BoE Governor Andrew Bailey stated that additional rate increases would be announced. In contrast, Bank of America (BoA) analysts anticipate that the Bank of England (BoE) will not increase rates and will maintain current levels until 2024.


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