Bloomberg is reporting a trend amongst UK businesses to employ temporary and contract workers, rather than full time employees, amidst economic uncertainty and increasing wage costs.
The House of Lords will today debate the government’s proposed Illegal Migration Bill today, which is expected to face fierce criticism – though is ultimately likely to pass. Lib Dem peer Lord Paddick is intending to put forward a “motion to decline” the bill, but without Labour backing this is unlikely to happen. Rishi Sunak will be hoping that this does pass the House of Lords as it is one of his five immediate priorities for 2023. As a reminder the others are: Halving inflation (something completely outside of his control), Economy growing (this one should be achievable), Debt falling (so far so good, particularly in real terms as inflation takes care of that), Cutting NHS waiting lists (not if strikes continue).
The Conservatives got a very bloody nose over the weekend, as the final local council election results showed them losing 1,063 seats, which was worse than even their own disaster predictions – though David Davis assured the News Agents yesterday that “it could have been worse” had Boris Johnson or Liz Truss been in Number 10. Therefore, Rishi Sunak will be clinging onto his central government agenda as the local government influence wanes significantly between now and the next general election.
Oil is an exception to the tight trading ranges, as they have capitulated between moving higher on concerns over Canadian wildfires potentially hampering supply and sticky inflation potentially quelling demand. The price of a barrel is now back to where it was in mid-March, before OPEC+ announced in early April that they were cutting production by a million barrels per day. The move could continue too, with futures markets having twice the amount of short positions in the first week of May compared to the last week of April.
Debt ceiling headlines remain abundant this morning, with Biden now weighing in and urging Republicans to drop the threat of default, saying “let’s discuss what we need to cut, what
we need to protect, what new revenue we can raise and how to lower the deficit to put our fiscal house in order… but in the meantime, we need to take the treat of default off the table… this nation has never defaulted on its debt. It never will”. When we first wrote some commentary on the debt ceiling it was in 2011 and the ceiling was raised from $14.3 trillion to $16.4 trillion – today the ceiling is $31.4 trillion. US GDP in 2011 was $15.6 trillion and in 2022 was $25.5 trillion – which means that debt is outpacing GDP – which also means for all the talk of “getting the house in order” there’s very little action.
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The vast Ukrainian Nova Khakovka Dam has been destroyed in the Russian occupied region of Kherson, Ukraine releasing a torrent of water as concerns for residents and nuclear power facilities up and downstream grows.
Plans have been unveiled for a Universal Basic Income (UBI) trial in the UK, with the think tank Autonomy currently seeking financial backing. It is hoped that the trial will span over two years with participants receiving £1,600 each month and being in control of how they spend or save the funds.
Today all eyes are on US labour market data where the markets will be looking to gain an insight into the health of the US economy and the extent to which the jobs market is feeding into inflationary pressures ahead of the Fed’s meeting on 12 June.
Last night, the House comfortably passed the debt ceiling bill in arguably the most important stage in the process to ensure that the world’s largest economy averts a technical default. The House of Representatives cleared the Fiscal Responsibility Act by 314-117, the bipartisan deal assembled by President Joe Biden and House Speaker Kevin McCarthy.
Tonight, congress will vote on the bill agreed by President Joe Biden and House Speaker Kevin McCarthy, as the US tries to avert X-date by raising the debt ceiling. According to Reuters, “the deal caps federal spending and forces more poor people to work for food aid, concessions that Democrats hate. But it also preserves much of Biden's Inflation Reduction Act and punts the next debt ceiling showdown into 2025, which Republicans hate.”
As markets weigh on the Bank of England’s interest rate decision on 22 June, this morning’s hotter-than-expected inflation print has seen investors upwardly revise rate hike expectations. Indeed, market reaction to this morning’s print is a further reaffirmation that inflation continues to be the hottest topic of conversation.
The incumbent Recep Tayyip Erdogan has secured another five years as Turkey’s president following a run-off election which saw him take 52% of the votes, against Kemal Kilicdaroglu’s 48%
UK retail sales rose higher-than-expected this morning having increased 0.5% on a month-on-month basis for April. This beat market expectations of a 0.3% rise and came after a 1.2% fall last month.