Referendum watch: 9 days to go
Markets were very guilty of ball watching yesterday as a football team’s defence would do, switching off for a minute and conceding in the death of the match. The whole market response to the Brexit situation can be ably summarised by how the most recent poll by ICM was traded. Slated for a 12.30 release, that time passed and market rumours went into overdrive; the pound was at times a per cent lower on the session and then half a per cent higher. The mistaken publication of an old poll number from May did nothing for everyone’s nerves.
The final poll showed that the Leave campaign has a 6 point lead in both ICM’s online and phone polling.
The more important, or more worrying depending on which side of the argument you sit, is that The Sun newspaper has taken sides and is asking its readers to vote to Leave. The Sun does not back losers; it typically waits until the last second to see which way the wind is blowing and back a horse that is a couple of lengths ahead.
Sterling is currently sat at 2 month lows versus the USD and near 3 year lows against the JPY and is looking sickly this morning. Betfair this morning are signalling that they believe Leave now has a 41% chance of winning; this was 17% 3 weeks ago
Chinese yuan also creaking
CNY has fallen to within a whisker of the lows it set in January overnight as markets continue to get shot of risky assets. The triple cocktail of a slowing economic picture globally, the fears over the EU referendum here in the UK and the expectations that the Federal Reserve will leave rates as they are tomorrow, and moreover what that says about the global economy, is a potent one.
Doubts are also creeping in as to what and how and if the Chinese will add stimulus to their economy in a bid to support growth. We will receive new lending and financing numbers at some point this week but yesterday’s poor investment numbers will hardly have helped.
The Day Ahead
In a brief pause from the referendum we get the latest UK inflation numbers at 09.30 today with most of the market expecting a slight move higher in both headline and core levels of CPI. Some of this may down to the weak pound, some to the increase in the oil price, and some will be down to higher retail prices in reaction to the new national living wage. I’d be surprised if the data gets a look in however; economic data is getting run over at the moment and a CPI increase of 0.1% is not much of a speed bump.
Elsewhere we also have US retail sales which will give a present look at the state of the US consumer following the poor jobs numbers of a few weeks ago.
Have a great day.