Headlines:

Markets:

  • USD leads, GBP lags on the day
  • European equities higher; S&P 500 futures down 0.2%
  • US 10-year yields down 6 bps to 3.893%
  • Gold down 0.6% to $1,655.53
  • WTI crude down 2.2% to $87.13
  • Bitcoin dup 1.1% to $19,611

The UK political drama continued today as the government is set to announce a U-turn on its economic plans, with Truss set to brief the public later and confirm an increase in the corporation tax from 19% to 25% - which follows Sunak's initial blueprint.

Kwarteng looks to be the scapegoat and the series of headlines gave the pound a couple of jolts during the session but even that is not enough as the quid is down over 1% against the dollar just under 1.1200 now.

Meanwhile, the dollar quietly went about its business as it recouped losses from yesterday's post-CPI reaction. Equities were more optimistic early on but there are some hints of uneasiness creeping in with US futures flat now, after having seen gains erased and then pulling a little back higher after JP Morgan and Wells Fargo earnings.

EUR/USD is down 0.6% to 0.9715 as the dollar is continuing to make up for losses yesterday. USD/JPY is up to its highest levels since 1990 in a push from 147.50 to 147.75-80 levels at the moment, as traders look to set their sights on 150.00 next.

Commodity currencies were briefly higher in early morning trade against the dollar but have given all of that back and then some as risk tones were tempered with. AUD/USD is taken down from 0.6340 to 0.6275, down 0.3% on the day, while NZD/USD is down 0.2% in a push lower from 0.5680 to 0.5620 currently.

There's also a bid in bonds again, largely stirred by sentiment in UK gilts as we see another strong rally for a second successive session. 30-year gilt yields are down 19 bps to 4.35% with the low earlier touching 4.24% amid the whole UK political fiasco.