Quarterly Outlook
Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges
Althea Spinozzi
Head of Fixed Income Strategy
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Macro Digest: The UK General Election finally agreed, Brexit not so much
Steen Jakobsen
Chief Investment Officer
Summary: Labour leader Corbyn today "caved" in and will vote for motion to call General Election tonight.
When: December 9, 10 or 11th.
Background: PM Johnson has been unable to sell his Brexit deal, now he is seeking a new mandate through a General Election.
Macro Impact: More time will pass before we get back to the issue Brexit – EU has granted a delay until January 31st. PM Johnson wants clear political mandate and the polls right now support him.
Market Impact: Market reaction muted – FTSE selling off slightly, while GBP came in bid post announcement breaking. (see charts below)
Conclusion: It increases chances of Brexit being passed by January 31st, but... it comes at the worst price – continued pause in real economic agenda’s in Europe and in the UK. UK credit-impulse will drag down UK growth through end of Q1-2020 setting up major expansionary policy from “newly elected PM Johnson” in 2020. Will UK be first in using MMT? We think so...
Background: PM Johnson has been unable to sell his Brexit deal, now he is seeking a new mandate through a General Election.
Macro Impact: More time will pass before we get back to the issue Brexit – EU has granted a delay until January 31st. PM Johnson wants clear political mandate and the polls right now support him.
Market Impact: Market reaction muted – FTSE selling off slightly, while GBP came in bid post announcement breaking. (see charts below)
Conclusion: It increases chances of Brexit being passed by January 31st, but... it comes at the worst price – continued pause in real economic agenda’s in Europe and in the UK. UK credit-impulse will drag down UK growth through end of Q1-2020 setting up major expansionary policy from “newly elected PM Johnson” in 2020. Will UK be first in using MMT? We think so...
The latest POLLS in the UK: https://www.politico.eu/europe-poll-of-polls/united-kingdom/
Conservatives @ 37%
Labour @ 24%
Lib. Dems @ 17%
We think that the end result will be a higher POLL for Liberal Democrats due to their clear stance on BREXIT, but more to come as election is called...
Hourly GBP:
Hourly FTSE CFD:
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