Overlapping Deadlines
The UK cancelled planned in-person talks with the EU's Brexit negotiator Michel Barnier on Monday and the sides will have a phone call instead. The message from the UK is that the EU needs to put more on the table or the talks are a waste of time.
But the EU strategy was showing some signs of success. A report on Monday said the House of Lords was preparing to strike clauses from the Internal Market Bill that would break international law – one of the key demands from the EU.
Whether that's enough to bring them back to the table remains to be seen. The same issues around fisheries, level playing field provisions and enforcement remain.
A reminder of the stakes came after the close on Friday when Moody's lowered the UK's sovereign rating to Aa3 from Aa2. The cited a soft economy and an erosion in fiscal strength but also added that “the quality of the UKʼs legislative and executive institutions has diminished in recent years.”
Sterling put on a brave face late in the week but the bond market wasn't as sanguine. Gilt yields touched 0.15% on Friday to nearly match the September lows. Negative rates are already on the table but a disorderly Brexit or continued rise in COVID cases would undoubtedly add some urgency.
CFTC Commitments of Traders
Speculative net futures trader positions as of the close on Tuesday. Net short denoted by - long by +.EUR +168K vs +174K prior
GBP -10K vs -11K prior
JPY +20K vs +21K prior
CHF +12K vs +13K prior
CAD -14K vs -18K prior
AUD +4K vs +11K prior
NZD +6K vs +5K prior
The euro net continues to drift lower after hitting a record in July but rising virus cases, lockdowns and economic risks combined with sinking eurozone yields argue for more short covering to come.Latest IMTs
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