September 26, 2018 / 7:37 AM / in 21 days

Daily Briefing: Corbyn - bounced into Remain?

LONDON (Reuters) - Has UK opposition leader and longstanding eurosceptic Jeremy Corbyn been bounced into backing a second referendum on Brexit?

Labour Party leader Jeremy Corbyn reacts during a session at the party's conference in Liverpool, September 25, 2018

Yesterday's unscripted move by his Brexit spokesman, Keir Starmer, to stipulate that any new "people's vote" on Brexit should include the option of remaining in the European Union won a long, standing ovation at the party's conference in Liverpool; then, pressed later by journalists, Corbyn had to repeat his stance that he would be bound by whatever the party decided on the matter.

It is still far from clear how Labour would position itself in the event that a second referendum became a real possibility, and it is worth noting that this is not a scenario that Brussels is warming to: many on the EU side want the UK to hurry up and leave.

Corbyn will try and put the whole confusion behind him today as he delivers a speech that will slam the social injustices of Conservative Britain and propose radical solutions.

There is very little cheer for Emmanuel Macron in the latest consumer confidence data from France, with the reading falling to its lowest level in more than two years.

The official INSEE statistics body said consumers were less optimistic about personal finances, notably as they start to feel the pinch from a rise in inflation.

With growth stuck at just 0.2 percent a quarter, Macron’s Finance Minister Bruno Le Maire is telling sceptical French voters to be patient with the reform process.

With the presentation of Italy's budget and economic targets due this week, 5-Star leader Luigi Di Maio came out last night with a renewed demand that the party's scheme for a minimum income for the poor and unemployed must be included in the budget or it would not win 5-Star support in parliament.

The bond market had been boosted during the day by signs that the coalition was heading toward a compromise to keep next year’s deficit target below 2 percent of gross domestic product.

MARKETS AT 0655 GMT

World markets are in thrall to Wednesday’s policy decision by the U.S. Federal Reserve, with one eye on $80-plus oil prices.

France's President Emmanuel Macron drinks a glass of water after completing his address to the 73rd session of the United Nations General Assembly at U.N. headquarters in New York, September 25, 2018

Despite some slippage by Wall Street equity benchmarks overnight, Asian markets were relatively buoyant going into the Fed decision, helped by MSCI’s decision to consider quadrupling the weighting of China’s big-cap stocks in its global benchmarks.

Shanghai stocks were up almost 1 percent and Hong Kong’s Hang Seng was up 1.5 percent. Tokyo and Seoul’s main benchmarks were higher, too.

Expectations of another Fed rate rise later on Wednesday are already baked in and futures markets also put the chances of a fourth 2018 increase later this year at around 80 percent.

So market reaction may hinge on signalling about what happens next year and how the Fed sees the economy developing over the next 18 months.

The consensus among Fed policymakers already indicates three more rate hikes next year, but market pricing is more hesitant about that despite some banks, such as Goldman Sachs, going for as many as four more in 2019.

Ten-year Treasury yields have been rising sharply of late in anticipation of further Fed tightening and continued buoyancy in the latest economic soundings, including news of a rise in U.S. consumer confidence to an 18-year high last month. Yields touched a four-year high of 3.1130 percent on Tuesday, although they have backed off those levels first thing today.

The dollar also remains on the backfoot this week, taking pressure off many emerging market currencies that have been battered all summer.

Argentina’s peso slipped again on Tuesday after the unexpected resignation of the country’s central bank chief. Turkey’s lira held steady as Turkey’s President Erdogan told Reuters the central bank’s recent steep interest rate rise underlined its independence.

China’s offshore yuan weakened as traders speculated over whether the People’s Bank of China would match any Fed interest rate increase tomorrow.

Euro/dollar was steady before the Fed decision too, with European Central Bank chief economist Peter Praet on Tuesday insisting his boss Draghi’s use of the word "vigorous" this week to describe underlying inflation trends was not intended as a policy signal.

European stock futures were up marginally.

— A look at the day ahead from European Economics and Politics Editor Mark John and EMEA markets editor Mike Dolan. The views expressed are their own —

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