BOE: VIEW CHANGE: MS look for next cut in Feb but still 2.75% terminal by Jul26
Sep-18 15:26
- Morgan Stanley has pushed back its expectation of the next rate cut to February from November nothing that "after August, we expected data to tip the BoE into 4Q cuts. On data developments since, we now change that view and we scrap the two rate cuts this year."
- MS does not complete rule out a December cut, attributing a 40% probability but even with the Budget and well-behaved pay growth, they "struggle to see the current MPC reaction function as aligned with moving before there is ample evidence on underlying disinflation and before headline inflation subsides."
- MS continues to look for a terminal rate of 2.75% but reached in July 2026 rather than in April 2026.
- So far we have seen JP Morgan and Rabobank also push back their next expected cut to February from November, and we expect we will hear of more sellside view changes over the next few hours.
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EQUITIES: Stocks Plumb New Lows, But S&P Ex-Mag 7 Still Higher
Aug-19 15:13
- e-mini S&P pulls back to touch a new daily low through the London close at 6439.00 - before markets stabilise off lows. Tech is notably underperforming: NASDAQ is leading the decline, with S&P 500 now in negative territory - although the DJIA holds small gains.
- Of note, Russell 2000 futures have come off highs, but are generally seeing a much shallower pullback relative to the larger cap indices.
- The NYSE Tick Index shows evidence of a sizeable sell program going through at 1101ET/1601BST - with 872 names sold on the downtick, the largest since Thursday last week and the response to the higher-than-expected PPI print.
- Megacap tech stocks look to be leading declines - Netflix, Alphabet and Meta Platforms are dragging the communication services sector lower, while soft semiconductors and chip names (NVIDIA, AMD, Oracle) drag the IT sector with them.
- Bloomberg's S&P 500 excluding the 'Magnificent 7' is still higher by 0.2% on the day, while trading lower by 0.2% when including those names.
- Supports to watch remain 6399.62, the 20-day EMA, and 6275.86, the 50-day EMA.
BELGIUM AUCTION PREVIEW: On offer next week
Aug-19 15:02
Belgium has announced it will be looking to sell the following at its auction next Monday, August 25:
- the 3.00% Jun-33 OLO (ISIN: BE0000357666)
- the 2.85% Oct-34 OLO (ISIN: BE0000360694)
- the 3.50% Jun-55 OLO (ISIN: BE0000361700)
CANADA: Conservative Leader Returns To Commons After Easy By-Election Win
Aug-19 14:56
Leader of the main opposition centre-right Conservative Party of Canada (CPC), Pierre Poilievre, has been returned to the House of Commons following a comfortable by-election win on 18 August. With 99.65% of the vote counted, Poilievre won the rural Alberta riding of Battle River-Crowfoot with 80.4% of the vote. Independent candidate Bonnie Critchley came second with 9.9%. The result was never in doubt, with the sparsely populated area of Alberta to the east of Calgary one of the most conservative areas of the country.
- Poilievre's win will enable him to debate PM Mark Carney in the House of Commons, a privilege he has never held. Prior to the 28 April federal election, Carney did not hold a seat in the Commons and so could not take part in the PM's Question Period. In a disastrous result for the Conservatives on election night, Poilievre lost his own riding in Ottawa. Since then, he has not been able to directly question Carney.
- The CPC leader's return to parliament does little to alter the gov'ts policy direction or Carney's position as PM. Indeed, Poilievre will face another challenge in the new year. In Jan 2026, CPC members vote on his leadership following a review of the election disaster, where the party went from leading the Liberals by 20% just months before the vote to seeing Carney win an overall majority after CPC support cratered in the face of trade and security threats from the Trump administration in the US
