European leaders must be bored of each other’s company by now, as their weekend meeting has been extended by another day. It had appeared that they were close to a deal late last night, but didn’t quite manage to get it across the line. The fact that talks were extended and not just disbanded shows the willingness to get a deal done and as such the market hasn’t reacted to them not quite getting there for now. The sticking point is apparently the size of the grants within the package, which are likely to end up being around €390bn, which we’d then assume get geared with low cost debt of some kind to get the package back up to the full fat €750bn that they were talking about. We should get an announcement out later today.
UK news is reasonably limited. Dominic Raab took most of the attention on the Sunday sofas as he talked about China’s “gross, egregious human rights abuses” against Uighur Muslims in Xinjiang. He also suggested that he was likely to revoke the UK-Hong Kong extradition treaty because of China’s imposition of new security laws there. Add to that the UK’s offer of citizenship for three million Hongkongers and the Huawei announcement last week and it’s pretty clear that relations aren’t where many would like them to be. This has led the Pound to be a little softer as we get started this week.
The UK housing market has seen a mini boom following the chancellors announcement to raise the stamp duty threshold. Deals jumped 35% in the five days after the announcement, though that’s from a lot of people holding back knowing that the deal was on the way. Lenders are still playing catch up in getting products back out to the market, with a number of very high loan to value products taken off the shelf when Covid hit. As these start to return and as the market fully returns there’s now talk of prices rising, which is a criticism being made of the scheme, in that it stokes demand but does nothing immediately to increase supply.
The news from the US is very much more of the same, with virus levels continuing to increase and cities on the verge of locking back down. Florida made it the fifth day in a row of more than 10,000 new cases reported yesterday. 49 hospitals in the state have reported that they’ve run out of intensive care capacity. This CNBC article is worth a read to get the picture of what’s going on there.
The wider picture is that the R number is above 1 in all but five states and that in turn means that the overwhelming majority of the country is at a point where the virus can start to spread exponentially.
The Donald is now 15 points behind Joe Biden in the polls. Mr Biden’s strategy has been pretty straightforward; ‘do nothing and let Trump screw things up’. The increase in his lead has been almost entirely down to the White House’s response to handling the pandemic, or lack of it. Trump’s polling to lose five out of six key swing states too.
Today’s a pretty quiet one on the data front, as is the week as a whole, but an announcement from the European leaders summit will be a market mover.