Daily Brief – Globalisation

Globalisation

As each week passes and returning President Trump’s January inauguration draws closer, he is if anything stepping up his rhetoric on the introduction of tariffs immediately after his return to office. China has responded in a measured way saying that they will maintain the value of the CNY rather than devaluing competitively as well as being a good global citizen by removing tariffs on poorer countries and opening visa free travel to China for more visitors. Han Zheng China’s Vice President yesterday described economic globalisation as an “irreversible historical trend”. For the present at least, that augurs well for the opening of the way towards a more amenable stance from Trump.

EUR/USD 1.0524

Volatility

For all those who said, see life under Trump will not be so volatile, yesterday was a good lesson for both Mexico and Canada and their currencies of what a Trump announcement of 25% tariffs would mean for them. CAD fell to a 4 1/2 year low against USD and Mexico’s MXP dropped like a stone to the extent of 2%. GBP initially also fell as a currency susceptible to a flight from risk but then recovered . Only a year ago in another world GBP was reported as being a safe haven currency at a time of high geopolitical stress, but now with markets on alert for what Chancellor Reeves has in future store for the UK economy, that status has evaporated.

GBP/USD 1.2607

UK Creditworthiness

Obviously it is strongly hoped that yesterday’s auction for British Government securities will not be seen as a high water mark for the UK. With GBP4.25 billion on offer of 2054 Gilts at a coupon of 1.25%, bids flooded in to the extent of GBP65 billion. The issuance calendar for 2024/5 reflects GBP19.2 billion of new Gilts so yesterday marked the successful getting away of a decent proportion of that sum. That will take the amount of UK Government debt outstanding to GBP 296.9 billion and that total amount will be the figure that markets have to continue to believe is viable for an economy that is forecast to rise by 1.5% per annum for the next 2 years.

EUR/GBP 0.8349

Fish and Chips

The world’s oldest man since April this year was Liverpudlian Brit John Tinniswood who departed this world yesterday aged 112. Apart from luck and practising moderation in all things JT put his longevity, like Alf Tupper of the Track for more senior comic readers, down to a weekly portion of fish and chips. The oldest living woman remains Japan’s Tomiko Itooka who is an impressive 116.

EUR/JPY 161.28

Ebony and Ivory

This day in 1989 Paul Macartney and Stevie Wonder sang this their joint 1982 Number One Hit together at a Los Angeles concert. However only 18 years later musical tastes had obviously changed when in 2007 BBC listeners voted it the Worst Duet in history and in 2009 heaped further opprobrium on it by naming it as the 10th Worst Song Ever. Neither of them overtly concerned.

Ebony and ivory live together in perfect harmony 
Side by side on my piano keyboard, oh Lord, why don’t we? 

We all know that people are the same whereever you go 
There is good and bad in ev’ryone
We learn to live, when we learn to give 
Each other what we need to survive, together alive

Ebony and ivory live together in perfect harmony 
Side by side on my piano keyboard, oh Lord why don’t we? 

Ebony, ivory, living in perfect harmony 
Ebony, ivory, ooh 

We all know that people are the same whereever you go 
There is good and bad in ev’ryone
We learn to live, when we learn to give 
Each other what we need to survive, together alive 

Ebony and ivory live together in perfect harmony 
Side by side on my piano keyboard, oh Lord why don’t we?

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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