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On August 29th, NBC News, citing two sources familiar with the matter, reported that US Defense Secretary Peter Hegseth has been discussing the possibility of running for president in 2028 with close associates in recent months. Hegseth and his wife believe he shares some similarities with Trump, including a tough, confrontational style and conservative stances on social issues, which could garner support from the MAGA base. This month, Hegseth also traveled to Iowa to campaign for Republican lawmakers. Iowa has long been a key outpost in US presidential elections, further fueling speculation that he is preparing to run. If he does run, Hegseth could compete with Vice President JD Vance, Secretary of State Rubio, and others. However, a Pentagon spokesperson denied the claims, stating that "Secretary Hegseth will not run for president," and that his primary focus remains leading the Department of Defense. The report points out that the ongoing war with Iran could be a major political burden for Hegseth, with 18 US military personnel already killed and the average US gasoline price rising from less than $3 per gallon to slightly over $4.On August 29th, Allianz Chief Economic Advisor Mohamed El-Erian stated that todays changes in the US Treasury yield curve released two signals. The spread between the 2-year and 10-year yields narrowed by approximately 7 basis points, and the spread between the 2-year and 30-year yields narrowed by approximately 10 basis points, showing a flattening trend. El-Erian believes this reflects a dual interpretation in the fixed-income market: in the short term, it represents a hawkish repricing following Federal Reserve Chairman Warshs firm commitment to the inflation target; in the long term, it reflects recognition of the Federal Reserves long-term credibility.According to NBC News, U.S. Defense Secretary Hergsays is considering running for president in 2028.On August 29th, Deutsche Bank economists predicted that the Federal Reserve would raise interest rates by 25 basis points each in September and December. Fed Chairman Warsh, in his Jackson Hole speech, emphasized the need to bring inflation back to the 2% target and released a clearly hawkish signal. Deutsche Bank believes that unless future economic data is "significantly weaker than expected," the threshold for avoiding a 25 basis point rate hike in September is already very high. The market has also quickly increased its bets on rate hikes: CME data shows that the probability of a cumulative rate hike of 50 basis points or more by December has risen to 51%, up from only 29% the previous day; the probability of a cumulative rate hike of 25 basis points is 38%, and the probability of keeping rates unchanged is only 11%. Following Warshs speech, market bets on a September rate hike have also clearly intensified.US President Trump criticized New York Governor Hoher for "taking Canadas side," refusing to use the name "American Lake," and "preferring Canada to win," while also supporting Blackman as the next governor of New York.

Despite the fact that Eurozone interest rates are anticipated to peak sooner, the EUR/GBP looks to have breached over 0.8630

Daniel Rogers

Dec 07, 2022 15:12

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The EUR/GBP pair has had a stronger recovery from 0.8580 during the Asian session, approaching the pivotal 0.8630 level. Despite the European Central Bank (ECB) being close to reaching an interest rate high, there has been strong demand for Euro bulls. Thus, the monetary policy meeting scheduled for next week will be of utmost significance.

 

The cross is attempting to break strongly above the significant barrier of 0.8630 for the fourth time this week. The hawkish remarks made by ECB policymakers are holding back the euro bulls.

 

"There will be another rate hike," said Constantinos Herodotou, governor of the Central Bank of Cyprus, "but we are very near to neutral." The European Central Bank's chief economist, Phillip Lane, is unsure as to whether the inflation peak has already occurred or will take place in 2019. He stated that although "much has already been done," he does not rule out more rate increases.

 

Investors are currently looking forward to Christine Lagarde's speech, which will be revealed on Thursday. The ECB President is likely to lower her inflation projection in her future statement in light of the poor retail sales numbers.

 

In contrast to expectations for a 1.7% loss, this week's Eurozone retail sales numbers showed a 1.8% decline. Aside from that, annual economic data contraction came in at 2.7% as opposed to the 2.6% consensus expectation. A decline in household demand demonstrates the effectiveness of the European Central Bank's (ECB) policy tightening initiatives. To reach their sales targets, firms could feel pressured to lower the prices of their products and services.

 

The United Kingdom's deteriorating food crisis, brought on by growing costs and a labor shortfall, has had an impact on the Pound Sterling. According to Minette Batters, president of the National Farmers Union, "the government and the entire supply chain must act swiftly." The Financial Times stated that "tomorrow might be too late." The economy already faces rising food inflation, and the issue with the supply of food will make matters worse.


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