Taking control!

Sterling is slightly firmer this morning after developments in the House of Commons last night, with the pound trading back below 91p against the euro and back above $1.21 against the dollar. The latter is little changed against the euro as it continues to trade just below the $1.10 level.  Meanwhile, bond yields in the core markets are nudging down amid some soft economic data

MPs in Parliament last night voted to take control of the Order of Business today, which will give them a chance to pass legislation that would prevent the Government from leaving the EU on 31st October without a deal by extending Article 50 until the end of January 2020. As Prime Minister Johnson loses his first vote in Parliament quite comprehensively, he has responded by tabling a motion to hold a general election in which he will need the support of two thirds of MPs to pass. However, Labour has said its priority is to get the legislation extending Art 50 fully into law first before supporting an election

The ISM index of manufacturing in the US dipped below the 50 level in August, signalling a contraction in activity in this sector for the first time since mid-2016 (though the index is still at a level that is consistent with an expansion in the overall economy)

Fed members are split on the need for a further reduction in interest rates. One (Bullard) is calling for a 50bps reduction at this month’s meeting in order to ‘get ahead’ of the downside risks to the economy. Another (Rosengren) though believes that immediate policy action is not needed as the economy continues to grow at a sold pace

At home, the latest Exchequer Returns show tax revenues were up 8.1% year-on-year over the January-August period and were slightly ahead of target by 0.7%

Data due today include  services PMIs in the main economies as well as the trade balance in the US