Good morning,

Risk sentiment remains subdued as we go into the week, not specifically because of Trump’s condition, but because of the conflicting reports surrounding it: The doctors gave an upbeat assessment of his health over the weekend, whilst the White House gave a more sobering account, leading to the doctor having to roll back and say he was aiming for optimism. Trump’s drive by in a motorcade gave voters some reassurance (Republicans that he was well enough to get into a hermetically sealed car and do a lap of honour, Democrats that he was stupid enough to get into a hermetically sealed car with other people and risk infecting them!) but there is also the wider concern over the other key political personnel that were infected whilst at the White House last week and how this may slow down proceedings in government – The Senate has been prevented from returning to session as a third senator is confirmed to have caught the virus, but it’s apparently not stopping them pressing ahead with confirming the supreme court nominee.

Concerns over the stimulus bill being delayed have been tempered by both sides, with Nancy Pelosi saying that talks with Steve Mnuchin have progressed and Republican leader Mitch McConnell saying “ I think we’re getting closer to an outcome”. Trump is cheerleading via Twitter, saying “OUR GREAT USA WANTS & NEEDS STIMULUS. WORK TOGETHER AND GET IT DONE. Thank You.”

Boris Johnson met Ursula von der Leyen on Saturday and following the meeting both said that progress has been made, though significant gaps remain, but that there is willing on both sides to  get something done.  Andrew Marr on Sunday told Boris that Dutch PM Mark Rutte has said that a deal is a “geopolitical necessity” , which Boris seemed very pleased to hear. Mr Rutte was speaking after the wrap up of the latest EU summit and also said “in an unstable world we need to stick together and therefore there is this clear rationale”. Angela Merkel, speaking after the same summit, said “it will emerge in the next few days if we can make progress or not”. Boris said yesterday that we would more than manage with an Australian style WTO deal, though, as Reuters reports, Australia aren’t overly happy with the “fractured and limited access” they have to Europe on just £13.5bn worth of exports, so it’s a shock that we’d be OK with it on our £300bn.

Boris covered a range of subjects with Andrew Marr yesterday and in a pretty humble interview warned the public of bumpy months ahead, at least until Christmas and possibly beyond. Taking an opposing strategy to Trump, he said “I don’t want to get people’s hopes up on the vaccine unnecessarily because I think there is a chance [of something this year] but it is not certain”. He put it on his team to step up, saying “it is up to the government to show we have the tools and the imagination and the creativity to get through this and we certainly will” Boris also defended the 10pm curfew, saying there is science behind the decision. Lastly, we got the latest catchphrase to live our lives by: “act fearlessly but with common sense”.

There’s a leaked government document in the press today talking about a three tier, ‘traffic light’ system for the UK with regards lockdowns. A simplified system would be welcome, but the top tier contains much stronger lockdown measures than we’re currently seeing but is said not to be finalised. The Guardian has the summary.

European news from the weekend is really around lockdowns, with Paris implementing new curbs following a significant increase in case numbers. Italy is also set to take measures, despite them being further behind the curve than a lot of other countries. They’re talking about curbs in social gatherings and also making the wearing of masks mandatory when outside, across the whole country.

There is talk that German bond yields could move even lower, making it even cheaper for the country to service their debt. This is because they’ve slowed down with fresh bond issues, yet the ECB is still out there making purchases under their QE programme, which means they have to buy some German bonds to keep things fair. By doing so they further increase demand for something already quite scarce, which in turn drives the price up and therefore the yield down.

The news items today will be Trump and his possible return to the White House. We’ve also got a keynote speech from Rishi Sunak to the Conservative party conference, which could contain a number of interesting plans and pledges, so this will be one with potential (interestingly, Rishi is the clear favourite to succeed Boris as the next PM, with only a third of Conservative party members saying they would oppose Boris being removed from power). Data today mostly contains revisions to September’s PMI readings for services, but there is also European retail sales, which will be worth a watch.

Have a great week.

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