What a storm!

Good morning

Well that was the mother of all thunderstorms.  We awoke last night to lightning, thunder and heavy rain.  Not the first time, and we were expecting the storm to drift away after a few minutes as storms usually do.  Instead it felt as though the storm was trapped above us.  The storm continued relentlessly for over two hours, I’ve certainly not experienced anything like that in the country, lightning so bright and continuous, thunder so loud.  Dropped off to sleep around 4am so I’m feeling a little more tired this morning than usual.  Fortunately we didn’t get the flash flooding that many experienced, and my internet is still working.  The last big storm we had knocked my internet out for a week.

A storm had hit the UK political scene on Monday with Starmer resigning in an emotional speech during which he talked about lots of good things he’d done but not mentioned any of the numerous u-turns he’d had to make during his time as PM, either as a result of an idea being awful, resented by the public or resented by his own party.  Still, better the devil you know.  Goodness knows what Mr Burnham will be like, should he win the leadership contest.  The Times reports Burnham will speak on the economy early next week. 

GBP actually rallied after Starmers announcement, perhaps a sign that of all things, the markets dislike uncertainty the most.  GBPUSD moved up from 1.3185 or so to an afternoon high around 1.3270, while GBPEUR traded from the 1.1520 area up to around 1.1600, remember that is an area that has held for the best part of a year now.   GBPUSD is off those highs, now 1.3230 but GBPEUR has held in the high 1.15’s.  In the crosses GBP has moved to 1.9030, 2.3260 and 213.75 against AUD, NZD and JPY respectively.  Must admit, if I left my job and the markets rallied I’d feel pretty glum.  

So GBPUSD sits around 1.3230 as I type, EURUSD is 1.1415 and equities are deeply in the red.  This feels more like a return to reality after the optimism over the end to the US/Iran war.  Even if oil starts flowing freely all is not so great in the world and deep risks remain.  In Japan, FinMin Katayama said she had been in talks with US TsySec Bessent yesterday and the US and Japan have reiterated their cooperation and agreement.  USDJPY did drop from 161.90 to 161.10 on news of that meeting broke yesterday afternoon but soon returned to the mid-161’s where we sit now.  Verbal intervention isn’t pushing UDSJPY lower but it may be slowing yen depreciation.

In other news, I see Alan Greenspan has passed away, he got the ripe old age of 100, quite a feat.  News of another death also reached me yesterday, an old client that I worked with from the 1990’s until just recently also passed away.  I won’t name him here, client confidentiality and all that, but I don’t think I’ll ever meet a gentleman so intelligent and talented, and with such a varied and dare I say, wild, life. 

Despite the storms overnight, temperatures are set to hit highs around 35°c or more here over the next few days, with high humidity making It feel even hotter.  I have heard that some schools will close as weather warnings go from amber to red.  I know not everyone is getting it like this, I see the south coast will be some 10°c lower in temperature which suits as I am heading that way Thursday and Friday.  

EU, UK and US PMIs today, and plenty of central bank officials on the calendar as well.  Still, dare I say that that the main event today could well be Amazon’s Prime Day which promises to bring huge savings on plenty of products we didn’t know we needed. 

This evening sees England back in world cup action, this time taking on Ghana.  Let’s hope that takes place without the weather delays France witnessed in their match against Iraq yesterday.  Heavy rain and thunderstorms meant the second half started almnost two hours late.  If that happens this evening I’m not sure I’ll be able to stay awake after last nights storms!

Have a great day…

-  09.00 EU services, manufacturing PMIs

-  09.00 ECBs Escriva speaks

-  09.30 UK S&P services, manufacturing PMIs

-  09.30 ECBs Lane speaks

-  13.15 US ADP 4 week average

-  14.00 BoCs Macklem speaks

-  14.15 ECBs Elderson speaks

-  14.45 US S&P services, manufacturing PMIs

-  14.55 ECBs Vujcic speaks

-  14.55 BoEs Taylor speaks

-  18.30 BoEs Dhingra speaks

-  02.30 AUS CPI