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MNI Gilt Week Ahead: External events take centre stage

Looking at UK specific events, this week the final Q1 GDP print will be the key release which includes the current account but external events will likely dominate UK markets this week.

LATEST INSIGHT

MNI Norges Bank Review: June 2024

The Norges Bank held policy rates at 4.50%, but the rate path saw a larger upward revision than expected.

MNI POLICY: BOJ Examines Framework To Make JGB Operations Easier

The BOJ wants to create a JGB trading framework to lower market shocks and increase the flexibility of its operations.

Political Risk

Labour On Course For 250-Seat Majority: Focaldata MRP

The latest constituency-level MRP (multilevel regression and post-stratification) opinion poll from Focaldata shows the main opposition centre-left Labour party on course for a 250-seat majority if its results were reflected in the 4 July general election.

  • The poll, carried out on a sample of 24,536 modeled reponses has Labour winning 450 seats compared to 110 for PM Rishi Sunak's centre-right Conservatives, a gain of 248 for Labour and a loss of 255 for the Conservatives.
  • The centrist Liberal Democrats are projected to win 50 seats (up 39) while the pro-independence Scottish National Party (SNP) is forecast to win just 16, a net loss of 32. The right-wing anti-immigration Reform UK is projected to win a single seat.
Chart 1. Focaldata MRP, Seat Projection

Source: Focaldata

US Dep. SoS Campbell Speaks On China Strategy

(MNI) London - United States Deputy Secretary of State Kurt Campbell has been speaking at the Council on Foreign Relations regarding US strategy in the Indo-Pacific and with regards to China. Livestream can be found here.

  • Campbell on AUKUS says that the pact is '...is a serious and long-term commitment for each of the partner countries, to one another and to the region.'
  • Describes the Biden doctrine on foreign policy as 'stepping up partnerships with allies and friends.'
  • On US-India ties, says that for the first time relations have reaced a 'velocity'.
  • Calls the Obama administration's 'pivot' towards Asia a mistake in terms of messaging, as it suggested to Europe that it would mean less focus on the region from the US.
  • Claims that the US approach towards China is bipartisan, saying Members of both parties are keenly aware of past episodes of strategic distraction".
  • Says that North Korea and China have been the primary support to boost Russia's industrial base since the invasion of Ukraine. Adds that 'There are limits to these partnerships but they cannot be ignored.'"

Yellen Urges Congress To Act On Biden Tax Plan To Address Housing Shortfall

Treasury Secretary Janet Yellen will deliver a speech in Minnesota today urging Congress to act on President Biden's tax plan - which includes a new USD$100 million fund to support affordable housing financing and bolstering the Federal Financing Bank’s financing of affordable housing to address an "affordability crunch" in the housing market.

  • Yellen will say: “Inflation is also down almost two-thirds from its peak. But President Biden and I know that prices for key household expenses like health care, energy, and housing are still too high, in large part due to challenges that have been mounting over decades.
  • “On housing, I expect that shelter inflation will moderate, and we see certain positive signs, such as the fact that total units under construction remains at a 50-year high. But we face a very significant housing supply shortfall that has been building for a long time. This supply crunch has led to an affordability crunch.”
  • “We need Congress to act... On housing specifically, the President has called on Congress to provide a tax credit for first-time homebuyers, which would help more than 3.5 million families purchase their first home in the next two years. President Biden has also focused on expanding housing supply, putting forward a plan to build over 2 million homes...”
  • AP notes: "Sal Guatieri, a senior economist at BMO Capital Markets Economic Research, wrote Friday that little change is expected in the housing market “until the Fed reduces policy rates.”"

MNI POLITICAL RISK - GOP Takes Partisan Approach To FY25 Bills

Daily roundup of news from the US.

Executive Summary:

  • The House of Representatives returns tomorrow to continue work on three Fiscal Year 2025 appropriations bills: Defence, Homeland Security, and State-Foreign Operations.
  • Treasury Secretary Janet Yellen will say in Minneapolis, Minnesota today she expects shelter inflation "will moderate" and call on Congress to act on a plan to, "help more than 3.5 million families purchase their first home in the next two years."
  • Moody’s Analytics’ chief economist Mark Zandi warned of an imminent recession in a social media post urging the Federal Reserve to cut interest rates.
  • The Supreme Court is preparing a blockbuster week of decisions, including whether former President Donald Trump should be immune from prosecution for acts committed whilst he occupied the Oval Office.
  • Senator JD Vance (R-OH) and Governor Doug Burgum (R-ND) are firming as the favourites for Trump’s Vice President.
  • Senior officials from the US, Republic of Korea, and Japan have condemned deepening military cooperation between North Korea and Russia.
  • Israel’s Defence Minister Yoav Gallant is in Washington this week for meetings with US officials on the next phase of the Gaza war and escalating tensions on the border with Lebanon. Gallant likely also has a secondary task: Repair a rift between the Biden administration and Israeli Prime Minister Benjamin Netanyahu.
  • Poll of the Day: Democratic Senate candidates continue to outperform President Biden in key swing states, suggesting that the Democrat brand remains strong despite a lack of enthusiasm for Biden.

Please find the full article attached below:

MNIPOLRISKUSDaily240624.pdf

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