Market movers today
Focus today is still on Brexit. Yesterday PM Boris Johnson paused the implementation of the Brexit deal into British law, as he lost the vote on the timetable, despite winning support for the principle of the deal. A majority may have supported the deal eventually but the MPs did not want to rush it through in just three days. Many questions arise on the back of yesterday’s vote. How long extension will the EU grant (Donald Tusk suggests to end-January as laid out in the UK extension proposal but sources hint France’s President Macron wants a shorter one)? Will there finally be support for a general election or will PM Johnson move forward with the legislative work anyway?
We have a very thin calendar again today ahead of the very important central bank day tomorrow. Most interesting today is the release of the preliminary consumer confidence indicator for the euro area in October due out at 16:00 CEST.
The Swedish debt office releases its new borrowing forecast today, see next page for details.
Selected market news
Although Boris Johnson found support for the ongoing process of the EU Withdrawal Agreement Bill, the proposed programme motion did not pass which leaves Mr Johnson needing another extension, as it now seems impossible to leave by 31 October. No. 10 sources reported yesterday before the vote that Johnson’s allies plan to call a general election before Christmas if the suggested time schedule was not passed and the EU offers a more than 10 day extension. The EU leaders are expected to grant the extension of Brexit, but EU leaders disagree on for how long. EU Council President Donald Tusk seems to prefer granting an extension to 31 January (as suggested by the UK), see Twitter , but France’s President Macron thinks the extension should be much shorter, perhaps even just a few days, according to Reuters . The next question is how the British politicians will spend the time. We see two ways forward. Either we are headed for a general election very soon or PM Johnson will continue the legislative work on implementing his deal into British law (which can either be successful leading to Brexit or be unsuccessful also leading to a general election). It is difficult to predict what is most likely but we are leaning towards an election, as the lack of trust in PM Johnson makes it difficult for him to pass the deal. We have elaborated our views in our newly published Brexit Monitor – Two ways forward: PM Johnson’s deal or general election .
Late in the day, Reuters quoted OPEC sources for saying that they would consider larger supply cuts for 2020 than previously planned to be discussed at the December meeting. The message immediately made oil prices jump around 50 cents to USD 60/bbl, but they came quickly back down afterwards. Oil prices are down USD 15/bbl from the highs in April following the weaker economic outlook, and, according to the International Energy Agency, supply growth next year from non-OPEC producing countries such as Brazil and the US will likewise weigh on prices.
