The Tuesday note - 28 May 2019

• The FTSE 100 dropped 71 points last week and closed at 7,277.7 on Friday, due to concerns over Brexit and the US / China trade war. Ten year Gilt yields hardened to 0.96%. 
• Crude oil prices have risen 13% this month, reaching $70 a barrel, on supply constraints arising from US sanctions on exports out of Iran and Venezuela. 
• In the UK, the European elections saw a movement away from parties pursuing a middle-path on Brexit, with big gains for the Brexit Party and the remain-supporting Liberal Democrats. 
• The ONS said that it understated April’s retail price inflation data, after using incorrect petrol and diesel prices. April’s RPI should have read 3.1% instead of 3.0%.

Chief Economist comments: 

The centre ground on Brexit is shrinking rapidly, because the public are losing patience. Last week’s Euro elections saw 40% of UK voters favour remain supporting parties, 35% hard Brexit parties, and just 24% backing Labour and the Conservatives. Meanwhile, on the Andrew Marr show, Chancellor Philip Hammond, pointed out that a majority of Parliament remained opposed to a ‘no deal’ Brexit. A general election now seems unlikely after the drubbing for the two main parties last week, so the only realistic option left is a second referendum.