UK: Starmer U-Turns On Winter Fuel Payments As Pressure From Left & Reform Grows
Prime Minister Sir Keir Starmer has confirmed that the number of pensioners who receive the winter fuel payment will be widened amid growing discontent among left-wing backbenchers in his Labour party. While the PM did not outline the details of the change, saying these would come in the autumn budget, the clear shift in policy comes as his party struggles with declining opinion polling numbers on the back of a poor return in the 1 May local elections and a parliamentary by-election defeat in a previously safe seat on the same day.
- Some Labour figures have said that the winter fuel payment cut was brought up consistently on the doorstep during the local election campaign, contributing to the party's poor performance. MPs and ministers on the left of the party are also said to be concerned that the gov't is drifting too far to the right, particularly on social issues in the wake of Starmer's announcements on immigration reform earlier in the month.
- While Starmer's sizeable majority continues to insulate the gov't from rebellions that could defeat legislation, the PM will be wary of alienating the left and soft left of the party just a year into his five-year term. It remains to be seen if further policy U-turns, or concessions to the left on taxes, come into play as the budget approaches.
- Pressure on the gov't is highlighted in opinion polling, where the right-wing populist Reform UK has led or held a joint lead in every nationwide poll since 14 April. Taking a hard line on immigration, Reform UK's economic policy is more left-wing nationalist, backing nationalisation of previously privatised assets (such as British Steel), and advocating for a more substantial welfare net (particularly for pensioners).
Chart 1. General Election Opinion Polling, % and 4-Poll Moving Average
Source: YouGov, More in Common, Opinium, Techne, Find Out Now, Freshwater Strategy, BMG, Survation, Lord Ashcroft Polling, Focaldata, JL Partners, Whitestone Insight, Deltapoll, Stonehaven, We Think, MNI
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PIPELINE: Corporate Bond Update: $5B Amex 4Pt Launched
Amex dropped the 6NC5 SOFR leg:
- Date $MM Issuer (Priced *, Launch #)
- 04/21 $5B #American Express $1.6B 4NC3 +98, $400M 4NC3 SOFR+126, $1.5B 6NC5 +108, $1.5B 11NC10 +128
- 04/21 $700M Excelerate Energy 5NC2
- 04/21 $2B QXO Inc. 7NC3 investor calls
FED: Citi: 125bp Cuts This Year, But Next One Pushed Back From May To June
Citi has pushed back its expectation for the next Fed rate cut to June, from May previously, as Fed officials "have guided against a May cut" amid government policy uncertainty.
- They still expect 125bp of cuts this year, however, which is more than the just-under-100bp currently priced by Fed funds futures. Citi: "we expect a range of data to have pushed Fed officials more dovish by June. That would include weaker "soft" data (including PMI this week) and signs that the labor market is loosening with the unemployment rate rising in the next few jobs reports."
- Citi shifted its 2025 view to 125bp of cuts immediately after the April 2 tariff announcements, from 75bp - in both cases they had seen the next cut in May.
- They note "risks are skewed to faster and/or deeper rate cuts" given that getting rates to around 3%, while close to where the FOMC sees longer-run neutral, is not "appropriately stimulative should financial conditions continue to tighten and the economy move closer to recession".
- MNI is not aware of any analysts still expecting a cut at the May FOMC at this stage (decision announced May 7), with futures-implied pricing of a 25bp reduction at around 15%.
FED: US TSY 26W BILL AUCTION: HIGH 4.050%(ALLOT 30.34%)
- US TSY 26W BILL AUCTION: HIGH 4.050%(ALLOT 30.34%)
- US TSY 26W BILL AUCTION: DEALERS TAKE 23.26% OF COMPETITIVES
- US TSY 26W BILL AUCTION: DIRECTS TAKE 13.40% OF COMPETITIVES
- US TSY 26W BILL AUCTION: INDIRECTS TAKE 63.34% OF COMPETITIVES
- US TSY 26W BILL AUCTION: BID/CVR 2.93
