Good Morning,

France is the latest country to be added to the quarantine list, with some holidaymakers furious at the government that they were only given a day’s notice (Really, you had no inkling this was on the cards?!) and are now apparently racing to Calais to get back before the rules come into play. In what sounds like a trade dispute, France has warned that they will take ‘reciprocal measures’. Cases of covid in France are now at a four month high, with 2,500 cases a day having been reported for two days in a row. Despite the rise in numbers, hospitalisations continue to fall as the demographic getting infected is largely the under 30’s.

Staying with the Channel: Boris has said he sees a ‘very, very good case’ for the EU to agree to a zero tariff trade deal with the EU, during a visit to Northern Ireland yesterday. He didn’t elaborate on why it’s in their interests, but did say that Ireland share that perspective, having met with the new Irish Taoiseach, Micheal Martin earlier in the day.

In the US: The White House has said that they’re happy with the progress being made by China to buy US products under phase one of the trade agreement. Up until now the entire rhetoric has been one of utter contempt for China, but the acknowledgement that the share of US commodity exports going to China has increased from the 20% baseline in 2017, to 40% seems to have ticked a box. This will no doubt make up part of an election line that talking tough yields results.
Trump’s other election line is one that he previously tried out with President Obama, saying that he wasn’t eligible to be president. He’s now questioning whether Kamala Harris is eligible to be VP as her parents immigration status at the time of her birth may not have been legal. The opposition have trashed his position from the get go, but you can see he’s dusted off his old playbook and is reading every page of it.
One area of concern from yesterday is Trump’s admission that he doesn’t want to fund the US Postal Service because of their role in mail-in voting. He believes that if the service doesn’t receiver the bailout funding that they need then they won’t be able to handle the amount of postal votes come November. Biden has called it an assault on democracy and others have called it voter suppression. The Guardian has a good summary.

The US has seized four tankers of Iranian fuel that was heading to Venezuela. The move deals a blow to both countries who are running out of supply chain options to do business together, with most legitimate shipping businesses now unable to undertake any logistics on either countries behalf because cargoes are uninsurable. The move hasn’t yet notched up the price of a barrel of oil, but tensions of this kind do usually have an effect.

The US has brokered a deal between Israel and the UAE to ‘normalise relations’ between the two countries. Trump has called it a peace deal, but Israeli PM Benjamin Netanyahu was quick to highlight that one of the agreements of the deal wasn’t set in stone, telling reporters that the plans to annex the west bank were just being “delayed”, having suspended Israel’s claims to sovereignty of the areas.  The deal will see cooperation between the two countries on a range of issues as well as investments around tourism, energy, healthcare and plenty of other areas. There have already been a lot of recriminations from countries in the region, not least Palestine, so this isn’t smooth sailing at all, but it is a win for The Donald.

In China: household debt levels have been pushed to record highs as households leverage themselves to get a piece of the stock market action. Household debt is almost 60% of GDP (still well below the UK’s 90%) and growing rapidly as banks are eager to lend the vast amounts of cash that the central bank has injected into the system. Banks are insisting people sign agreements that they won’t use the money to invest in stocks or property, but that isn’t stopping it from taking place and there are concerns that this could all go horribly wrong. The Shanghai Composite Index is up 30% from it’s lows back at the beginning of March, though it’s a volatile place to be. Bloomberg has the story.

Looking to today, it’s been pretty quiet in futures, despite news from the US that everyone on Capitol Hill is off on holiday without getting the deal done. Markets are likely to await US retail sales numbers before they decide which way to go, whilst EURUSD is floating around in the middle of two big expiries today and it will be once they come off that investors decide whether to stay bullish on the euro, or dial back some of their bets.

Have a great weekend


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