EU-UK: UK For Sec-No Route Through NI Protocol Issues Yet, But Atmosphere Better
UK Foreign Secretary James Cleverly speaking to the House of Commons European Scrutiny select committee regarding the Northern Ireland protocol. States on the nature of talks, "The fact I am speaking regularly with [EU Commission VP] Sefcovic, the fact there is a better atmosphere is important and is positive, but it shouldn’t be read that I am shy in putting forward the very real concerns that exist."
- Cleverly on the protocol issues: "You can’t skirt round it, you can’t ignore it, I don’t yet see a route through that. If we can find one I am very happy to, but those concerns are there, they cannot be wished away....We want to maintain all the elements of Good Friday Agreement...."
- The two sides remain in something of a holding pattern at present. Early stage technical talks on the protocol continue. The Northern Ireland Protocol bill, which would unilaterally disapply the protocol, is still going through the House of Lords but at a very slow pace. The snap elections to the Northern Ireland assembly, seen by UK and EU as potentially delaying talks further, are not set to take place until the New Year at the earliest.
- Cleverly says that the gov't will "pursue both tracks" in holding talks w/EU and continuing NIP bill through parliament.
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US: Warnock-Walker Debate Underway Shortly
Incumbent Georgia Senator Raphael Warnock (D-GA) and Republican challenger Herschel Walker will hold their only live debate of the midterm cycle shortly in Savannah, Georgia.
- The debate can be followed here: https://www.fox5atlanta.com/live
- The race continues to be rated a “toss-up” by non-partisan pollsters with Walker appearing to shrug off much of the negative press associated with revelations published last week that he allegedly paid for an ex-girlfriend’s abortion.
- The debate is expected to favour Warnock. As Walker himself said: “I’m this country boy, you know. I’m not that smart. And he’s a preacher. He’s a smart man, wears these nice suits. So he is going to show up and embarrass me at the debate Oct. 14, and I’m just waiting to show up and I’m going to do my best.”
US: Biden Shortly Due To Deliver Remarks On "Lowering Costs For Families"
President Joe Biden continues his West Coast tour where he is shortly due to deliver remarks from Orange County, California on the Medicare provisions of the Inflation Reduction Act.
- Livestream: https://www.youtube.com/watch?v=GUuqgfHP9kk
- The White House hopes that a publicity drive before the midterm elections next month can inform voters of how the Inflation Reduction Act can lower the price of prescription medicines by allowing Medicare to negotiate prices with pharmaceutical companies.
- Recent polling has shown that the policy is broadly popular but only ~30% of voters are aware of the policy.
- According the White House, Biden "will also sign an Executive Order directing the Department of Health and Human Services to explore additional actions it can take to lower prescription drug costs to build on his Administrations work lowering costs for working and middle-class families."
US TSYS: Early Bond Rout Levels Out, Inflation Concerns Remain
Tsys and equity markets extending session lows in late morning trade after posting decent gains on the open.
- Several factors contributing to early reversal off highs: bonds initially followed Gilts after UK PM Liz Truss televised conf re: mini-budget comments, reversing planned freeze on corporate tax, comments on sacking of Chancellor Kwarteng (more on that shortly).
- Bonds gapped lower/extend session lows after U-Mich 1Y inflation exp climbed to 5.1% vs. 4.6% est - first time since March. Yield curves bounced off deepest inversion since April 2000 (2s10s -55.877) briefly before short end support waned.
- Lead quarterly EDZ2 futures extending session lows (-0.055 at 94.900) as KC Fed George and VC Cook express need for ongoing rate hikes to combat inflation, SF Fed Daly sees Fed "likely to raise interest rates as high as 5% to tackle stubborn inflation and keep restrictive policy for some time, some of her most hawkish comments to date." Chances of 75bp hikes at both Nov and Dec FOMC meeting gaining.
- Bond yields leveled out in the second half while equities continued to march lower. Currently, 2-Yr yield is up 3.5bps at 4.4981%, 5-Yr is up 6bps at 4.2606%, 10-Yr is up 5.8bps at 4.0019%, and 30-Yr is up 5.3bps at 3.9691%.
