Return to Insights

Morning Update

No party has managed to maintain a clear majority in yesterday’s Spanish legislative elections, with the Popular Party and Socialist Party looking like they will also lack the ability to form a collation, respectively.

Spanish Elections

 

No party has managed to maintain a clear majority in yesterday’s Spanish legislative elections, with the Popular Party and Socialist Party looking like they will also lack the ability to form a collation, respectively. The incumbent Spanish PM Pedro Sánchez’ decision to call a snap election, came after his party’s poor performance in the May local elections, which itself follows four years of the Socialist Party’s rule over Spain.

In Spain’s lower house, 176 seats are required for an outright majority. Presently, provisional results indicate tat the Popular Party has won 136 seats to the Socialist Party’s 122. Meanwhile the far-right Vox has taken 33 seats while the new left wing group Sumar party has held 31 seats. The current numbers indicate that Alberto Núñez Feijóo’s Popular Party will lack enough seats to form a coalition with the Vox party, leading to speculation over whether Sánchez will seek to form a left-leaning coalition. Of course, given Spain’s constitutional make-up, King Felipe VI of Spain will invite one of the party leaders to try to form a government first.

Given the lack of a clear winner, in the instance that no party is able to form a coalition, the Spanish electorate may be subject to further elections (as was the case in 2015/16 and 2019).

In early morning trading, Spain’s 10-year government bond yields rose marginally above 3.5%, as political uncertainty weighs on investor sentiment.

All eyes on Fed and ECB Interest Rate Decision

 

Wednesday afternoon will see the Federal reserve make their latest interest decision, where the general market consensus is expecting to see a 25bps rate hike, brining the benchmark rate to 5.5%. The last policy meeting’s minutes underlined how policy makers foresee further rate hikes down the line, as the central bank tries to bring inflation back down to its 2% target. Given that the Fed previously suggested that the decision to pause in June was unanimous, many economists were surprised to learn in the minutes that some policy markets in fact favoured a 25bps hike, highlighting that hawkish influence most likely remains. Earlier this month, data indicated that inflation was continuing to slow with headline CPI (Annualised) slowing to 3% against expectations of 3.1%. This showed the index falling 100bps from May’s print and marked the lowest headline inflation since March 2021. As such, while markets are still considering the likelihood of a further 0.25% rate hike this week, many view that the Fed may be approaching the end of their tightening cycle after.

The following day, Frankfurt will also be conducting their latest rate decision, with markets similarly forecasting a 25bps rate hike to bring their benchmark policy rate to 4.25%. Their policy meeting on Thursday follows 400 basis points of monetary tightening since July 2022. Inflation across the Eurozone presently stands at 5.5%, which though marking its lowest level since January 2021, continues to concern policy makers, not least because of core consumer prices rising 20bps between May and June.

Barbenheimer

 

With millions across the world heading to cinemas to watch Greta Gerwig’s Barbie and/or  Christopher Nolan’s Oppenheimer, the former has won the box office battle. According to Universal Pictures, Oppenheimer made a global total of $174.2m over the weekend while Barbie took in a total of $337m. In the UK, admissions at Vue cinemas on Friday were the highest Friday since the pandemic – a hopeful sign for the industry given a number of difficult years.

Ready to talk FX?

Get in touch with one of our friendly and knowledgeable experts to see how FX strategy can drive commercial impact in your business.

Contact us

Related
Commentary

Find out how we have helped our clients meet their hedging requirements.

Fed Issue Forward Guidance as Policy Makers Hold Rates

Thought for Thursday, benchmark policy target rate maintained by the Fed, signs of more easing than expected for US inflation, and today's events.

Conservatives Reveal Manifesto Ahead of Labour’s Launch Today

Word of the week Wednesday, manifesto from the Conservative party released yesterday at Silverstone, Labour party manifesto set to release today after making criticisms, data shows sharp decline

In Focus: America’s TCJA

Travel Tuesday, focus turns to the Tax Cuts and Jobs Act as the US election draws closer, UK unemployment data, and wage growth comes in marginally higher than expectations in the UK.

European Parliamentary Elections

Macro Monday, fallout from provisional European Parliamentary election results dominate headlines, French President calls for snap election, and what's happening today.

ECB Cut Rates as Markets Look Towards US Labour Data

Friday feeling, ECB cut rates after nine months of holding at highest level, release of US labour market data this afternoon, and rising gold prices continue.

All Eyes on ECB

Thought for Thursday, focus is on the ECB for today's announcement, vote of no-confidence for Wales's first minister, and cuts for BoC benchmark interest rates.

Key Things To Grasp | HCFX
S1; E5: Key Things To Grasp

Some tips about the global FX market.

In this FXcellence episode, we dig into a few key themes that we think it's important for our clients to know about, and also how and why the FX market operates the way it does. They say a little bit of knowledge can be a dangerous thing, but we think that the more you know, the more informed your decision making will be!

Types of Hedging Strategies | HCFX
S1; E4: Types of Hedging Strategies

How do you work out what's best for you?

In this FXcellence episode, we look at a number of approaches to hedging and the benefits and implications they offer. Getting the optimal strategy might not be achieved on day one, but you've got to start somewhere! Here's a great place to begin.

Ready to talk FX?
Get in touch today to see how FX strategy can drive commercial impact for your business.
Contact us