UK: Pressure Grows On PM As Manchester Mayor Hints At Leadership Challenge
Sep-25 08:32
Ahead of the annual conference of the governing Labour party (running 28 Sep-1 Oct), PM Sir Keir Starmer is coming under increasing pressure from both external factors and internal party machinations. Over the past several months, Starmer's approval ratings have fallen to an all-time low amid economic stagnation, cost-of-living pressures, and rising public anger on the issue of immigration.
- The latest intrigue comes as Mayor of Manchester, Andy Burnham, gave an interview to the Daily Telegraph in which he claims that sitting MPs have privately contacted him to ask him to challenge Starmer for the leadership. Such a public statement of intent just days before conference could prove significantly destabilising for the PM.
- A possible saving grace for Starmer is that Burnham faces obstacles in any run for the leadership, primarily because he is not a sitting MP. He would need to find a Labour MP in a safe seat willing to step down.
- Undoubtedly, the right-wing populist Reform UK (leading nationwide opinion polls by a comfortable margin) would run a major campaign to defeat Burnham, meaning his nascent leadership campaign could be over before it starts.
- Political betting markets have shifted further against Starmer, with data from Smarkets showing bettors assigning a 45.5% implied probability that the PM leaves office in 2026, up from 18.9% exactly one month ago. Bettors give a 16.1% chance that he remains in place until 2029, when the next general election is due.
Chart 1. Political Betting Market Implied Probability: Sir Keir Starmer Exit Date, %
Source: Smarkets
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USD: USDNOK is back at pre Powell level
Aug-26 08:28
- The Dollar was overall flat during the Overnight session against all G10s, but we are starting to see few pips moves in EUR, GBP, JPY, SEK, USD versus the Nokkie.
- Oil has been under some small pressure, likely helping some of the NOK weakness.
- USDNOK is heading back to pre Powell level, the cross was exchanging hands around 10.1891, now at 10.1780 (prices are according to Bloomberg).
FED: Summary Of Latest Trump-Cook Developments
Aug-26 08:23
A quick summary of the latest developments in President Trump’s challenge to Fed independence, in case missed late yesterday/overnight:
- Trump published a letter to Fed Governor Cook (in a permanent voting role through 2038) on Truth Social noting that “you are hereby removed from your position on the Board of Governors of the Federal Reserve, effective immediately”.
- It follows and is based on prior accusations of mortgage fraud from FHFA’s Pulte, with Trump having first urged Cook to resign before threatening to fire her if she didn’t do so last week.
- Gov. Cook has since said Trump has no authority to fire her and she won’t quit, doubling down on her position having pushed back on threats last week.
- From a statement released by Cook’s attorney: “President Trump purported to fire me ‘for cause’ when no cause exists under the law, and he has no authority to do so. I will not resign. I will continue to carry out my duties to help the American economy as I have been doing since 2022.”
- Re-upping the MNI exclusive from April 21 with Lev Menand an ex-senior Treasury adviser who specializes in legal matters around central banking at Columbia Law School. He told MNI that Governors Lisa Cook, Michael Barr and Vice Chair Philip Jefferson, all appointed by former President Joe Biden, could be on the chopping block if Trump has his way. “The officials at most risk are the recently-appointed Biden appointed officials associated with bank regulatory policy.”
- Discussing an at-the-time pending ruling before the Supreme Court related to Trump’s firing of directors of other independent agencies but nevertheless still useful context, he added that if the President were to prevail, get this emergency stay and then say, ‘You know what, I'm just going to fire some Fed governors because they'll be out of a job for months,' the lower court can't put them back in during their litigation. See MNI INTERVIEW: Fed Independence Facing Imminent Risk – Menand (Apr 21).
EURIBOR OPTIONS: Downside Put Spread
Aug-26 08:12
ERH6 98.06/97.93ps 1x2, bought the 1 for 3.5 in 10k.
