Good morning,

It was a busy day for public speaking yesterday. Andrew Bailey was first up, explaining that though the technicalities of negative rates have been ironed out, it does not mean that they’re coming anytime soon. He qualified that the reason they’d got all of the prep work done was because “it would be a cardinal sin if we stated that we had a tool in the box, which in practice we didn’t think we could operationally use”. Mr Bailey also gave his assessment of the UK economy, which was fairly sobering and he said that the quick return of the virus has reinforced the banks’ view that the downside risks could be substantial. Touching briefly on the furlough scheme, which he had previously said should be wound down, he now thinks the chancellor should be looking at ways to continue to protect viable jobs.

Rishi Sunak is said to be looking at different ways of providing support and drawing inspiration from other countries which are subsidising employees that can return to work on a part time basis. The Guardian report that the Treasury has decided to delay an announcement that was due to happen today over business loan schemes being continued and instead is likely to roll out a wider package of measures to cover employees too. Unsurprisingly, the model they’re most closely looking at is the German one by where employers pay for the time that employees are in work and the government tops up the payroll for the time that they aren’t. Mr Sunak is said to only be in favour of providing this for jobs where there is a 50-60% return to normal and is still reluctant to support jobs with no long term viability, though we’re not sure if that now changes as we drift towards a second lockdown.

Boris Johnson’s speech last night was, mercifully, a bit of a damp squib. He warned of ‘difficult months to come’ and reiterated that existing and new restrictions must be adhered to if we’re to avoid a second lockdown. He also said that the army would be enlisted if needs be to help enforce the rules. If you didn’t see it, the Matt Lucas parody of the PM as the Bake Off intro was hilarious.

A small victory for Boris and the Internal Markets Bill yesterday, as it cleared the committee stage without a vote. The bill had the amendment inserted that would prevent ministers acting to break the law without parliamentary approval and is now one step closer to becoming law. The EU have renewed their legal threats over the continuation of the bill, regardless of now requiring a Commons vote, but ministers are not likely to send the bill to the House of Lords for debate until after the October 15th summit with the EU, where there is an outside chance a deal can be done. If that were to be the case, it might not be necessary to continue the debate further, or if it is then it’s unlikely that the bill would become law until December, which would still give negotiations time to continue.

Outside of the UK: The US has passed a government funding bill that will get them through to December 11th without having to shut down. That’s the other side of the election, but its not clear whether we will know who the winner is by then. Channel Four News last night had a worrying piece on how extremists on both sides of the divide are preparing for an unclear election outcome.  If you can, do watch the piece in the link, but the summary is that people are arming up and getting ready to take to the streets.

In the nomination for the Supreme Court controversy, Mitt Romney has come out and said he will vote in favour of the president’s nomination when it is put to a vote. Previously it had been hoped that enough Senate Republicans would abstain from a vote on filling Ruth Bader Ginsburg’s seat ahead of the election. They would only need four Republicans not to vote and two had said they wouldn’t. Romney has been an outspoken critic of Trump from day one, but he isn’t willing to give up this opportunity, so now the vote looks like it will pass. Trump is due to announce his candidate by the end of this week.

The Washington Post is reporting that the FDA is going to announce tougher standards for a covid vaccine which means that there is even less chance of one being approved ahead of the election. The FDA wants to demonstrate that its standards are high, as they fear that people will opt not to get vaccinated if they think that it’s been a rush job with corners being cut to get it out. This won’t please The Donald but does make a lot of sense.

Trump told the UN general assembly, via video link, yesterday that “We must hold accountable the nation which unleashed this plague onto the world, China… the Chinese government, and the World Health Organisation – which is virtually controlled by China – falsely declared that there was no evidence of human-to-human transmission”. China’s president Xi came back with “we should embrace solidarity and get through this together… and launch a joint international response”. This story in the Financial Post is worth a read to go into more detail.

Overnight the stock market in the US has had a couple of standout performances: Nike released results showing an 82% increase in online sales, prompting a 12% rise in their share price. Tesla tried to win the markets over with talk of half price batteries and a $25k electric car, but investors weren’t satisfied with the timeline and so took 7% off their share price after hours, adding to a 5% fall during the earlier trading session.

Looking to today, it’s all about PMI numbers and they’ll start at 08:30 from Germany and the UK run comes in an hour later.

Have a great day


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