Duncan Donald

Mon, Dec 16

A wave of optimism hits the markets as the UK finds a government and trade negotiations progress

In what was probably the biggest move of the year last week saw a great deal of resolution across the global economy.  In the UK Prime Minister Boris Johnson secured his tenure after a UK wide general election where his Conservative party secured an overwhelming victory by 80 seats. Whilst the win was expected, the magnitude was not with concerns existing that they may have to require a coalition government to rule. The outright nature of the victory should facilitate the progression of his Brexit deal through the House of Commons when it reopens on Thursday after the Queen’s speech. Johnson will likely push to get the transitional Brexit deal done as soon as possible with talks his team will be working on it over Xmas to meet the deadline at the end of January.

The Pound soared as the exit polls were revealed at 10 pm, gapping up to highs of 1.3500 against the US Dollar and sending the EUR/GBP rate down to 0.8275 as the likelihood of a Conservative Party majority looked unquestionable and the public showed belief in Johnson. However, questions have to be raised about the strength of the opposition, as Labour suffered their worst electoral results since the war and the Liberal democrat’s leader Jo Swinson failed to even retain her own seat in the regional elections. As the results drifted in, to the point where it was evident Labour had lost, leader Jeremy Corbyn announced that he would not lead the party into another election. This wasn’t the step hardline Labour supporters were looking for especially following the loss of some Labour heartland seats to the Tories, many were calling for his resignation as it was claimed he was unelectable and the root cause of an embarrassing defeat.

The Conservatives weren’t the only winner of the elections, up in Scotland the public showed their deviation from the path taken by the rest of the UK as they voted heavily in favour of the Scottish Nationalist Party (SNP). The landslide victory for the party brought them 50 of the available 59 seats way beyond expectations and now poses some serious questions for the PM.  How does he deal with a country within his control that has clearly shown they want to remain part of the EU, despite enjoying a big victory on the night, the potential for break up of the nation. It will be interesting to see how he deals with this in the commons as if he chooses to dismiss the desires of the Scots outright by nature he will galvanise their strength even more.

After promises from Trump to the point where the markets were disbelieving him, finally, Friday China confirmed the completion of Phase one of the trade negotiations bringing continued joy to the stock markets as the December the 15th tariffs were postponed as the Chinese agreed to buy additional US agricultural products. With improving US data, progressive trade negotiations and the Trump impeachment enquiry looking to be fizzling out the stock markets are looking to end the year on a high but the question is what does this mean for the Federal Reserve (Fed) and monetary policy.

Last Wednesday brought the interest rate announcement from the Fed where they chose to leave rates on hold and signalled this could be that status for the entirety of 2020. But the inroads made last week in trade negotiations could potentially lift the pressure seen on the US economy so as we move into the new year data and Fed speakers will be watched eagerly, starting with the US GDP numbers of Friday this week.


Markit Manufacturing PMI – France

Markit Manufacturing PMI – Germany

Markit Manufacturing PMI – Eurozone

Markit Manufacturing PMI – UK

Markit Manufacturing PMI – US


Employment Change – UK

Unemployment Rate – UK

Housing Starts – US

Industrial Production – US

Capacity Utilization – US

Manufacturing Production - US


ECB President Lagarde Speech

Ifo Business Climate – Germany Ifo

Inflation Rate – UK

Inflation Rate - Eurozone


Retail Sales – UK

BOE Interest Rate Decision

Continuing/Initial Jobless Claims – US

Existing Home Sales - US


GfK Consumer Confidence – UK

GfK Consumer Confidence – Germany

GDP Growth Rate – UK

GDP Growth Rate – US

Corporate Earnings – US

Michigan Consumer Sentiment December - US