Economy

Cantillon: NTMA may be relieved to reach fundraising target

Market volatility could follow FBI testimony, UK election and ECB meeting

The fear in financial markets is that any damaging revelations from James Comey’s US Senate testimony would hit Donald Trump’s plans to overhaul the US tax system and infrastructure spending plans. Photograph: Mark Wilson/Getty Images

Thu Jun 8 2017 - 05:39

Welcome to “Super Thursday”. At least that’s what investors are calling it as they await former FBI director James Comey’s testimony on alleged Russian interference on the US presidential election, the UK election and European Central Bank’s latest monetary policy meeting.

Depending on the outcome of any or all events, the National Treasury Management Agency (NTMA) may be relieved it can say by mid-morning that it has raised more than the minimum full-year fundraising target it set at the start of 2017.

The State’s debt agency’s planned sale of €1 billion of bonds on Thursday morning, through an auction of debt due in 2026 and 2045, would bring the amount raised so far this year to about €9.35 billion. The full-year goal is between €9 billion and €13 billion, as the NTMA seeks to line up resources to repay debt due next year as the Government edges towards a balanced budget for the first time in a decade.

The fear in financial markets is that any damaging revelations from Comey’s US Senate testimony would ultimately hit Trump’s plans to overhaul the US tax system and infrastructure spending plans – an agenda that has sent the dollar and global equities higher in the past seven months.

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Meanwhile, British prime minister Theresa May’s bet on calling an early election to extend her majority and improve her hand in upcoming Brexit talks may have backfired, according to some polls and projections. The latest prediction by YouGov suggests her Conservative Party may win just 302 seats, down from 330 currently, and the magic 326 needed for a majority in the House of Commons.

Analysts and traders say financial markets are continuing to price in victory for May – if only a small Conservative majority. So, any upset may lead to volatility across banks, equities and currency exchange rates.

Over at the ECB, governing council members are expected to stick to their aggressive stimulus policy as they meet on Thursday afternoon as staffers at the organisation are said to have cut their inflation targets, even though euro zone economic growth is picking up. Comments from ECB president Mario Draghi will be closely monitored.

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