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MNI Gilt Week Ahead - July 12 2021: Speeches, data and Covid

  • It will be a busier week for UK events this week. Prime Minister Johnson is due to give a press conference today confirming that the majority of the Covid-related restrictions will end next Monday. While the week also sees inflation data and labour market data both due for release as well as speeches from the BOE's Ramsden and Saunders.
  • Prime Minister Boris Johnson is due to confirm today that most legal restrictions related to Covid-19 will end on 19 July, including the end of legal requirements to wear masks and recommendations to work from home. The main exceptions to this are the self-isolation rules for those who have been in contact with someone who has tested positive and bubbles will continue to be in place in schools and nurseries (with these restrictions due to end on 16 August for fully vaccinated adults and all under 18s).
  • Against this backdrop, the rise of Covid-19 cases has remained roughly the same in absolute terms as last week, with over 30,000 daily cases now recorded, but the percentage change has fallen to 27.3%. Hospital data has deteriorated, however, with the number of daily admissions up over 50% compared to the prior week. First doses of vaccinations have also fallen substantially over the past week, with the 7-day average at the lowest this year (outside of the period around the 4-day Easter bank holiday when supply was also constrained). The Sunday Times reported that the government is likely to recommend that the gap between the first and second doses of the vaccine be cut from 8-weeks to 4-weeks. There are no supply issues and two doses are shown to be much more effective against the Delta variant than one dose.
  • The weekend media report that the government is still going to go ahead with all the announced changes to restrictions, but that public support has been dropping somewhat (although not disastrously so for the government). The Observer reported that 50% of people were in favour of the relaxation of restrictions but 73% of people thought people should still have to wear masks on public transport. Interestingly, only 10% in the poll thought that restrictions should have been lifted earlier. Johnson is likely to say that cases will rise (potentially citing the 100,000 per day number reported in the press), and will state that hospitalisations will also rise, but that the NHS will cope.
  • Elsewhere, we will hear from MPC members Ramsden on Wednesday and Saunders on Thursday. These will be the first members outside of Governor Bailey to speak since the June MPC meeting and the confirmation from the government of the easing of Covid-19 restrictions. Both speeches look relevant with Ramsden due to speak on the UK economy and Saunders' speech entitled "The Inflation Outlook". The following Monday (19 July) we will also hear from Haskel on economic scarring. These speeches will be watched closely by the market ahead of the August MPR.
  • Also this week, the Bank of England Financial Stability Report is due for release on Tuesday (although is unlikely to move macro markets) while inflation is due Wednesday (which will definitely be watched closely by the market) and labour market data is due for release Thursday. The DMO will also launch the new 1.125% Jan-39 gilt via syndication, with the transaction expected Tuesday.


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