Good morning,
The Super League’s grand opening had all the ingredients for a spectacle—fireworks, lasers, a live band, and Michael Buffer booming his famous catchphrase. But on the pitch? Silence. Leigh’s 1-0 golden-point win over Wigan came after the first-ever 0-0 draw in the competition’s history, with 80 minutes of scoreless rugby in freezing conditions. A bumper crowd of 21,748 braved the cold for a Vegas-style event but got a defensive stalemate instead. In the end, it took Gareth O’Brien’s drop goal to break the deadlock—proving that, despite all the razzmatazz, points still aren’t guaranteed.
Last Week
Donald Trump has had a busy week reshaping foreign policy—and rattling markets in the process. His proposed 25% tariffs on steel and aluminium have alarmed US industry, with businesses scrambling to offset rising costs. Meanwhile, after a call with Vladimir Putin, Trump claimed the US and Russia would “immediately” begin negotiations to end the war in Ukraine, hinting at a shift in Washington’s stance. Adding to the chaos, US inflation came in hotter than expected at 3%, raising doubts over Federal Reserve rate cuts. And then there’s Gaza—where Trump’s surreal idea of “owning” the territory and turning it into a Middle Eastern Riviera has been met with a mix of outrage and disbelief. For now, the only certainty is uncertainty.
The UK economy managed a slight surprise in the final quarter of 2024, with GDP edging up 0.1%, beating expectations of a decline. December’s 0.4% growth lifted the pound, but the figures do little to change the reality for most households—real GDP per head fell 0.1%, leaving the average Brit worse off. Consumer spending provided a bright spot, rising at its fastest pace in two years, but businesses are struggling to raise prices as job losses mount. Meanwhile, falling borrowing costs have given Chancellor Rachel Reeves some fiscal breathing room, but weak growth and high debt interest payments mean her “non-negotiable” fiscal rules are under pressure. With little sign of a true recovery, the government may find that better headline numbers don’t translate to political goodwill.
Hopes for peace talks in Ukraine sent the Russian rouble surging to its strongest level in five months, rising nearly 3% against the dollar after the release of American teacher Marc Fogel. The move, coupled with Donald Trump’s pledge to end the war, has driven a 21% rally in the rouble since the start of the year. Meanwhile, the euro remains sensitive to trade war fears, with investors wary of further US tariffs on European goods. Despite an upbeat start for equities, traders are hedging against volatility spikes, reflecting unease over Trump’s economic policies. While markets are reacting to early signs of de-escalation, the law of diminishing returns may soon set in—meaning political gestures will need to translate into real diplomatic progress to sustain currency momentum.
This Week
The US dollar started the week strong after Trump announced 25% tariffs on steel and aluminium imports and floated the idea of “reciprocal tariffs” on trade partners. Fed Chair Powell reinforced a cautious stance on rate cuts, and higher-than-expected US inflation data in January further fuelled hawkish bets. While the dollar eased late in the week, investors are now pricing in just 30bps of rate cuts this year—less than the Fed’s projected 50bps. With FOMC minutes due on Wednesday, markets will scrutinise any signals on how policymakers may respond if inflation risks rise. A hawkish tone could lift the dollar and Treasury yields but weigh on equities. Friday’s flash S&P PMIs for February may provide further confirmation of this outlook, keeping markets on edge.
UK data releases this week will be crucial in shaping expectations for Bank of England policy. December’s employment report is due on Tuesday, followed by January’s CPI on Wednesday, with retail sales and February’s preliminary PMIs set for Friday. The BoE’s recent 25bps rate cut was expected, but the unanimous vote—including a push for a 50bps reduction from two members—surprised markets. Notably, former hawk Catherine Mann backed a double cut. Investors currently price in 55bps of further easing this year, but if CPI data signals persistent inflation, those bets may shrink. Better-than-expected Q4 GDP and strong PMIs could reinforce this view, supporting the pound’s recent recovery as traders reassess the BoE’s rate path.
Key Events
Tuesday 18th February
03:30 Australian Cash Rate
07:00 UK Claimant Count Charge
09:30 BOE Gov Bailey Speaks
13:30 Canadian CPI
Wednesday 19th February
00:30 Australian Wage Price Index
01:00 New Zealand Cash Rate
07:00 UK CPI
19:00 US FOMC Meeting Minutes
Thursday 20th February
00:30 Australian Unemployment Rate
13:30 US Unemployment Claims
22:30 Australian Gov Bullock Speaks
Friday 21st February
07:00 UK Retail Sales
08:15 French PMIs
08:30 German Manufacturing PMIs
09:30 UK Flash Manufacturing PMI
13:30 Canadian Retail Sales
14:45 US Manufacturing PMIs
17:30 Canadian Macklem Speaks
Have a great week,
The Garton Team.