March 16, 2016
Yesterday's markets were all pretty quiet, ahead of what promises to be a busy day today.
We start with UK unemployment numbers, which are expected to show the headline rate remaining unchanged at 5.1% and a slight uptick in weekly earnings – which is what the Bank of England will want to see now that we're near to full employment.
Just before the Chancellor gets up to speak across the Commons (and speak down to every member of the public) we see US inflation data, which apparently once you strip out the noise is as high as it's been since Lehmans collapsed and the world stopped buying. “Sticky price inflation” is now at 2.9% in the state of Atlanta, and it's prices in less volatile items (women's clothes, car insurance, medical services) that are causing the rise. This hopefully won't have escaped the notice of the Federal Reserve, as runaway inflation is a risk long forgotten, but by all accounts a very real threat.
George Osborne's budget, his seventh, will be closely watched by the FX market, but the previous six budgets have produces a dead heat between being Sterling positive and Sterling negative, with three apiece. Most of what he's set to say has already been reported in the press, so we won't go into it here. What he will be relying on heavily is the Office of Budgetary Responsibility's forecasts. If their numbers stack up, his will too.
The big market mover for today will come from the Fed rate announcement and subsequent statement. If there is no rate move then people will be scrutinising the text of the statement to see if they can pick up any clues as to what the Fed are thinking – this is usually achieved by comparing the previous statement and looking for key words being omitted or added.
Donald Trump took another stride towards the Republican nomination last night, but it's House Speaker Paul Ryan who could become the Republican nominee if it gets to a deadlock at their party convention in the summer. Mr Ryan hadn't put his hat in the ring during the main race but hasn't ruled out stepping in if its deadlocked. this could be a master stroke from a Republican party who'd almost rather vote Democrat than see Donald Trump lead them to the White House.
It's all been pretty quiet on the markets overnight, as we await the Fed's decision and the news from the UK today is mostly going to impact the FTSE and Sterling crosses, rather than the wider European indexes.
William will tell you all about it, tomorrow.
Have a great day.