CONSUMER CYCLICALS: Kering | CEO at AGM (x2)
Apr-24 14:42
Can ignore - do not look at Kering for macro read-through. Moncler & Hermes both saw growth in Q1. ...
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BUNDS: Still recovering from the low
Mar-25 14:37
- The German Bund is back above the 128.00 figure, the latest leg higher was boosted by the US Data coming below expectations.
- There isn't much in Terms of technical at current level, with the initial upside area of interest seen at 128.48, Monday's Opening gap, Bund only managed a 128.46 high Yesterday.
UK FISCAL: Headroom to Grow by GBP15bln in 2026-27 Due to the "Small Print"
Mar-25 14:37
- Chancellor Reeves set out two fiscal rules in the Autumn Budget. The “stability rule” is that the current budget (i.e. excluding investment spending) must be in surplus in the 2029-30 fiscal year. This was the fifth year of the forecast when the rules were introduced.
- The 2029-30 fiscal year will remain the target until we reach the 2026-27 fiscal year when the rule will adapt so that the current budget must be in “balance or surplus” from the third rolling year of the forecast (which initially will remain 2029-30) and “must then remain in balance or surplus through the forecast period.”
- The three-year rolling rule defines “balance or surplus” as “in surplus, or in deficit of no more than 0.5% of GDP.” The objective of this rule is so that the government is only borrowing for investment.
- One aspect of this rule that has not really garnered much attention is that the initial 2029-30 target is for a surplus - but then from 2026-27 the 2029-30 target allows a 0.5% of GDP current deficit (as this is defined as still “in balance”).
- This means that from the 2026-27 fiscal year around GBP15bln of extra headroom will be available without anything changing at all. So in some respects, the Chancellor can afford to be a little more liberal with headroom at some point either now or in the Autumn Budget in the knowledge that the headroom will open back up.
- There is obviously the chance that Chancellor Reeves tries to utilise this headroom early by marginally altering the wording to add “balance or surplus” to the nearer-term target – but we think that would reduce her credibility in the eyes of the market. We don’t think it can be fully ruled out, however.
GBP: GBPUSD: Monitoring Support at The 20-Day EMA
Mar-25 14:34
- The GBPUSD trend needle continues to point north, and the latest shallow pullback appears corrective. Moving average studies are in a bull-mode position, highlighting a clear dominant uptrend. A resumption of gains, and a breach of the bull trigger at 1.3015, would pave the way for a climb towards 1.3048, the Nov 6 2024 high.
- Initial firm support to watch is 1.2870, the 20-day EMA. Clearance of this level would signal scope for a deeper retracement towards the 50-day EMA, at 1.2731.
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