Monday, 21 November – quick market update

COP27 ended on Sunday with an agreement for richer countries to fund poorer nations, although details need to be agreed. There was also a failure by countries to agree to phase out fossil fuels, meaning commitments on emissions did not go further than the weakened Glasgow COP26 pledge to phase down polluting coal power and phase out inefficient fossil fuel subsidies. Many of the world’s biggest fossil fuel producers, including Saudi Arabia, succeeded in staving off the demands for bolder action on climate change, in spite of a dramatic threat of an EU walkout the day before.

This morning German producer prices unexpectedly dropped in October by -4.2% month-on-month versus consensus expecting +0.9% increase and a prior print of +2.3%. That being said, over the course of the year, producer prices are still up +34.5% and the main reason for the increase has been energy price developments (energy prices are up +86%).

In the UK, ministers are denying the option of a Swiss-style relationship with the EU is being considered following reports that some in the UK government were leaning towards such a post-Brexit format. However, whilst Prime Minister Sunak does want to improve relations with the EU and reach a deal on the Northern Ireland Protocol early next year, he has insisted a Swiss-style relationship (which would mean much closer ties to the EU than many Brexiteers would like) is off the table and Downing Street sources have rejected the idea of a bespoke Swiss-style deal – which would require payments into the EU budget, mirroring EU law and freedom of movement.
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