Good morning,
Jaguar’s latest rebrand has caused a stir, and not in the way they might have hoped. A new logo, a vibrant ad, and a “live vivid” tagline left critics asking one key question: Do you still sell cars? From Musk’s snarky “Do you sell cars?” post to Nigel Farage predicting their doom, the backlash has been fierce. But Jaguar’s response? “Go hard.” Bold words from a brand steering toward an all-electric future.
Last Week
Currencies rallied against the dollar last week as markets digested President-elect Donald Trump’s economic team picks and trade threats. Trump announced Scott Bessent, a hedge fund veteran seen as pragmatic, as his Treasury Secretary nominee. Bessent’s call for gradual tariff implementation briefly calmed investor nerves. However, Trump’s vow to impose 25% tariffs on imports from Mexico and Canada reignited concerns, sending shockwaves through markets. The Japanese yen led gains, rising 0.7% to ¥153.7 per dollar, while the euro and pound strengthened by 0.6% and 0.5%, respectively. Meanwhile, the US dollar index dipped 0.7%, snapping its eight-week winning streak amid weaker sentiment. Long-term Treasury yields also fell as uncertainty over Trump’s aggressive trade policies cast a shadow over global growth prospects.
The euro climbed to 1.06 last week, recovering from recent lows, as markets welcomed ECB President Christine Lagarde’s call for Europe to adopt a conciliatory approach towards US trade tariffs under President-elect Donald Trump. Lagarde urged EU leaders to prioritise negotiation over retaliation, warning that a global trade war could slash GDP growth worldwide. Her suggestion of a “cheque-book strategy,” including increased purchases of US liquefied natural gas and defence equipment, soothed immediate fears of escalation. However, political turmoil in France threatens the euro’s stability. With opposition parties opposing Prime Minister Michel Barnier’s contentious budget, French bond yields briefly exceeded those of Greece, highlighting mounting fiscal and political risks. Should France’s government falter, the euro could face renewed pressure amidst investor uncertainty.
The UK economy is showing signs of recession, with November’s composite PMI falling to 49.9, marking a contraction in activity. Labour’s tax-raising budget has dampened sentiment, hitting business confidence and household spending. Despite the seasonal run-up to Christmas, consumers kept spending flat, while the vital services sector struggled under the weight of rising costs and hiring concerns. The government’s ambition to lead G7 growth over the next five years now faces significant headwinds. Sterling gained modestly against the dollar, buoyed by hopes of a potential trade deal with the US. President-elect Donald Trump’s affinity for the UK could present an opportunity for stronger transatlantic ties, providing a glimmer of hope amidst the economic gloom.
This Week
The US dollar softened last week, retreating from recent highs despite a brief rally spurred by President-elect Donald Trump’s tariff threats targeting Canada, Mexico, and China. Traders appeared to lock in gains ahead of Thanksgiving and key economic data releases this week. Market sentiment remains cautious, with Fed funds futures reflecting a strong chance of a pause in rate hikes. December’s meeting holds a 35% likelihood of no change, rising to 58% for January. Attention will turn to November’s ISM manufacturing and non-manufacturing PMI due out this week, with inflationary pressures in focus after hotter-than-expected October data. The spotlight will be Friday’s Nonfarm payrolls, as investors seek insights into labour market resilience and clues for the Fed’s path forward.
The euro edged higher last week as markets reconsidered the likelihood of a 50bps rate cut by the ECB. Softer-than-expected inflation data from Germany and the Eurozone, while still showing signs of stickiness, have reduced expectations of aggressive easing. Germany’s inflation rate rose to 2.2% y/y in November, while the Eurozone’s headline rate ticked up to 2.3% y/y, reinforcing calls for a more gradual approach. ECB member Isabel Schnabel’s hawkish remarks further dampened expectations, with the probability of a double cut at the December 12 meeting now standing at just 20%. Euro traders will closely watch ECB President Christine Lagarde’s address to the European Parliament’s ECON committee on Wednesday for insights into the central bank’s next moves amidst ongoing economic uncertainty.
Key Events
Monday December 2nd
15:00 US Manufacturing PMIs
Tuesday December 3rd
07:30 Swiss CPIs
15:00 US Job Openings
Wednesday December 4th
00:30 Australian GDP
09:00 BOE Gov Bailey Speaks
13:15 US Non-Farm Employment Change
18:45 US Services PMIs
Thursday December 5th
13:30 US Unemployment Claims
Friday December 6th
13:30 Canadian & US Unemployment Rate, US Non-farm Employment Change & Average Hourly Earnings
Have a great week,
The Garton Team.