Daily Treasury Briefing
Thursday 13th December

Theresa May survived the confidence vote, but with a slenderer margin than expected, suggesting the Brexiteer wing of the party are not alone in their lack of confidence in the PM. No doubt Downing Street will put a positive spin on the result – not least because under party rules, May can now not be challenged for another year But the reality is that the number of ballots cast against her was significantly larger than they would have hoped for and deals a blow to any hope that she might be able to use the vote as a springboard to get her Brexit deal through parliament. Sterling held its advance after the vote trading at a high of $1.2687 this morning. Asian equities advanced alongside US equity futures after a series of positive developments in US-China trade talks buoyed global stocks. Gains accelerated from Japan to Australia, with Hong Kong and Chinese stocks outperforming. Futures on the S&P 500 rose as news broke that Chinese importers have bought US soybeans. 

The European Central Bank will want to prevent rate-hike expectations slipping further, meaning Mario Draghi may emphasise continuing expansion today. But he is expected to lower GDP and inflation forecasts. Plans for QE reinvestments, liquidity measures and Italy will draw attention. It’s also expected that the new capital key will be applied to maturing assets, prompting a slight shift away from Spanish and Italian bonds and toward German debt. There is also a two day EU summit that starts today in Brussels. The Brexit situation will most likely be high up on the agenda. Donald Tusk has said he will be talking to Theresa May regarding her assessment before the EU-27 will discuss the Brexit situation. EU officials keep on reiterating that they will not renegotiate the deal, including the Irish backstop. Reports suggest that the 27 might be a political declaration which may include a statement saying that the backstop will only be used as a last resort. I very much doubt that such changes to the agreement will be enough to get it through parliament.

FX trends
Ccy-pairLatestChange T-1Change T-5
FX trends source: Handelsbanken Capital Markets

Stock markets
IndexLatestChange T-1Change YTD
FTSE 1006881.980.0260-10.4815
Dow Jones24527.30.6444-0.7765
Nikkei 22521816.20.9880-4.1676
Stoxx 600349.55-0.1286-10.1830
Stock markets source: Official Stock market closing rate

Interest rate trends
Currency3m Libor % (or equiv.)
Source: Handelsbanken Capital Markets

CommodityLatestChange T-1Change YTD
Brent Crude$ 60.150-10.04934948
Light Sweet Crude$ 51.180.058651026-11.37662338
Gold$ 1244.81-0.0682-4.4512
Silver$ 14.74770.0726-12.9287
Copper$ 6144.75-0.41730816-14.7391425
Wheat$ 5300.6647673317.450582869
Sugar$ 342.5-0.203962704-15.51554021
Source: Reuters

Key data calendar
EZCPI Mom Germany07:000.1%0.1%
EZCPI EU Harmonised MoM07:000.1%0.1%
EZECB Main Financing Rate12:450.000%0.000%

Source: Handelsbanken Capital Markets
Figures are reported in percent month on month/year on year if not otherwise stated.

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