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Sterling qualities

| Posted by: Paul Donovan | Tags: Paul Donovan

  • Sterling after the UK referendum weakened on concerns about access to EU markets, then stabilized as investors judged the UK's other qualities to be a possible balance. That balance has broken, with political comments suggesting an environment that is less welcoming to foreigners. Sterling is the world's weakest currency this week.
  • The US employment report is the most watched statistic in financial markets, but that does not make an individual report reliable. Look for some improvement in hiring in the payrolls number, but also look closely for the revisions.
  • The labor market data may feature in Sunday's presidential election debate in the US. While that offers the entertainment of a gladiatorial battle, for markets the more interesting weekend comments may come from Washington and the IMF jamboree. 
  • Estonian inflation moved to 1% y/y (from 0.3%) – not a shock, but markets like round numbers and 1% is a psychologically significant round number. German industrial production was stronger than expected. A reminder that what people say in a sentiment survey is not necessarily what they do in real life.