Daily Treasury Briefing
Friday 15th February

Up to speed
Asian equity markets fell with the US and UK equity-index futures amid trade talk pessimism. They have withdrawn from their highest levels since October amidst concerns that this week’s trade talks between China and the US have shown very little progress. Brexit       

Theresa May’s government was defeated on her approach to Brexit negotiations last night. The PM didn't even hang around to hear the result of the largely symbolic vote,  from which the European Research Group abstained. However, a Downing Street spokesperson said that it would not change the PM’s approach to talks with the EU. All eyes are now on February 27th for what happens next.  

The pound was set for its biggest weekly decline in almost four months after lawmakers dealt UK May another defeat in Parliament, refusing to endorse her Brexit strategy. Sterling weakened 0.1% to $1.2788, taking this week’s decline to 1.2%, its largest weekly drop since October.

The day ahead     
 UK January retail sales data was scheduled for 9:30am this morning, consensus forecast for sales excluding auto fuel were for growth of 0.2% m/m, compared with a decline of 1.3% in December. Numbers came in above consensus expectations as UK retail sales excluding auto fuel rose 1.2%. The Q4 numbers suggest the UK may have been the best performing major economy in Europe, despite Brexit.

Markets will also be watching economic data from the US later today, including the Empire State survey which will provide us with a manufacturing update. Also from the US today, the University of Michigan consumer sentiment survey, which is a guideline for confidence is holding up.

Following yesterday’s vote in the US Congress for a new budget agreement to run through to September, another government shutdown seems unlikely when the current deal expires this evening. 

President Trump plans to use unilateral authority to redirect nearly $7 billion approved for other purposes to construct a border wall, a White House official said. That's on top of the funds in a Congress spending measure he'll sign today to avoid another government shutdown. His plan to declare an emergency divided congressional Republicans while House Speaker Nancy Pelosi said she would consider a lawsuit to block the move.

Economic and political concerns in Europe seem to be undermining the euro and so have provided offsetting support to the ‘greenback’. The Spanish PM Sanchez has called for a snap election this morning, the election will be held the 28th of April.

FX trends
Ccy-pairLatest
GBP/USD1.2896
GBP/CHF1.2972
GBP/DKK8.5026
GBP/EUR1.1394
GBP/JPY142.75
GBP/NOK11.129
GBP/SEK11.893
EUR/USD1.1318
EUR/CHF1.1385
EUR/SEK10.438
EUR/NOK9.7677
FX trends source: Handelsbanken Capital Markets

Stock markets
IndexLatest
FTSE 1007165.15
Dow Jones25425.76
Nikkei 22521144.48
Stoxx 600363.88
Stock markets source: Official Stock market closing rate

Interest rate trends
Currency3m Libor % (or equiv.)
GBP0.90338
USD2.69288
EUR-0.33200
SEK-0.07600
DKK-0.32000
NOK1.27000
Source: Handelsbanken Capital Markets

Commodities
CommodityLatest
Brent Crude63.35
Light Sweet Crude53.78
Gold1312.29
Silver15.71
Copper6091.75
Wheat522.50
Sugar344.40
Source: Reuters

Key data calendar
MarketDataTimeExpectedPrevious
UKRetail Sales Inc Fuel MoM09:300.20%-0.9%
SPCPI YoY08:001.0%1.0%
USEmpire Manufacturing13:307.03.9
USIndustrial Production MoM13:300.1%0.3%
USUniversity of Michigan Sentiment15:0093.591.2

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


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