Pound Hits Highest Since July as Johnson Strikes Brexit Deal

While the UK Parliament has to sign off on the Brexit agreement, bank credit rallies after Boris Johnson reached an agreement with the EU. U.K. lenders’ riskiest notes jumped, leading a credit rally, after Prime Minister Boris Johnson reached a Brexit agreement with the European Union. Barclays Plc’s 1.25 billion pound ($1.6 billion) 5.875% CoCo reversed earlier losses and hit 99.5 pence on the pound, the highest since May 2018, according to data compiled by Bloomberg. If Johnson gets the deal through Parliament, this is the end of the beginning .If he does not, Parliament with luck comes up with another way forward. It’s a fork in the road, but it’s hardly the end of the road. Welcome to The Atlantis Report . The Pound surges to stand above $1.29 for first time since May after UK and EU declare that a Brexit deal has been reached. but falls back again as DUP confirms it will vote against proposals, casting doubt over whether Boris Johnson can get past Parliament UK stocks advance amid measured relief rally . The FTSE 100 as well as the DAX are higher as we approach the close of the trading day on the back of the news that a Brexit deal has been reached. The news raised sentiment around Europe as it seems that we are approaching the end game of the drawn out political process. In keeping with their tradition, the DUP have said no to the deal, but some elements of the Conservative Party’s eurosceptic wing have backed the agreement. The mood is upbeat as things are moving forward from a political point of view, but Saturday’s vote in the House of Commons will be make or break for the Brexit deal. Banks braced for last dose of PPI pain after late surge in claims . More than two million Britons joined a last-minute dash for PPI compensation this year, with a rush of complaints leaving banks "overwhelmed" in the run-up to an August deadline. The City watchdog said there was a 34pc spike in payment protection insurance complaints in the first half of the year, piling fresh pressure on UK banks which are already expecting to shell out £50bn for the long-ruinning mis-selling scandal – five times the cost of the London 2012 Olympics. Analysts said the final cost of the debacle were unlikely to be announced just yet given the volume of claims UK banks are sifting through. Big banks are due to annonuce their third-quarter financial results later this month. Nationwide Building Society’s 600 million-pound perpetual bond, sold last month, hit a record. Oddly, NBS’s perpetual bond started rising on October 10th, well before PM Boris Johnson announced his Brexit agreement. A contingent convertible bond (CoCo), also known as an enhanced capital note (ECN) is a fixed-income instrument that is convertible into equity if a pre-specified trigger event occurs. A famous CoCo bond is the Deutsche Bank 6% Perpetual. While issued at par (100), the G-spread on the Deutsche’s 6% CoCo bond is , 11%. Odd, that DB’s CoCo bond remained relatively calm after the Brexit deal was announced. Meanwhile in The US: Stocks on Wall Street are showing modest gains as US reporting season continues. Earlier today it was reported that China and the US are discussing the next phase of trade talks, which is playing into the positive move too. The US-China trade situation has taken a back seat today, but as long as sentiment doesn’t sour, the feelgood factor should continue.



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