Morning Bulletin

Yesterday

• Yesterday morning’s key UK data was largely in-line with expectations:
  • The Average Earnings Index was 2.5% as expected.
  • Government borrowing actually ran a surplus of11.6Bn. That borrowing figure led to the ONS suggesting UK borrowing for the year to date is at its lowest level since the Financial crisis in 2008.
  • The number of people claiming Unemployment related benefits (Claimant Count Change) was down7,200 during January. A rise of 2,300 had been forecast.
  • Despite the fall in benefits claims, the overall Unemployment rate unexpectedly rose to 4.4% from a prior 4.3%. That was in fact the first increase in the rate since June 2015.
• Whilst the UK data was largely solid the Pound did decline a fraction in FX space.
• Sterling did bounce back in the afternoon following comments from a number of Bank of England members who were testifying before the Treasury Select Committee on inflation and the economic outlook.
  • Chief Economist Andy Haldane said he thought there was a chance interest rates would need to rise faster than the central bank’s central view in order to bring inflation to target.
  • Governor Mark Carney suggested the financial markets predictions of a 50% chance of a rate hike in May were now moving appropriately in line with the underlying economic data.
• Some of yesterday’s other key data included:
  • Eurozone Flash Manufacturing PMI 58.5 (59.2 Exp)
  • Eurozone Flash Services PMI 56.7 (57.7 Exp)
  • US Existing Home Sales 5.38M (5.61M Exp)

• Busy data calendar today. This morning UK GDP is our key print at 9.30am.
• Into the afternoon and the minutes from the ECB’s latest monetary policy meeting will be closely scrutinized when released at 12.30pm.