Rates lower for longer

7 October, 2015

In the absence of any meaningful economic data today investors are looking ahead to tomorrow’s Bank of England interest rate policy and FOMC minutes. For some time now the markets have been of the thinking that the impending monetary tightening cycles from the Federal Reserve and BOE will move neatly one after the other, with the Fed hiking in either September or December this year and then the BOE soon after that. This consensus has now been thrown out the window following the recent poor run of economic data as investors accept that interest rates are set to stay lower for longer. For many this is hard to fathom considering that a commencement of the monetary tightening cycle from one of either the Fed or the BOE has been much anticipated throughout this year. We are now seeing plenty of evidence to suggest that for both these central banks this tightening cycle isn’t set to start until well into 2016 and who moves first is open to debate. Tomorrow’s MPC voting and BOE minutes will be of great interest and an absence of any more hawks joining Ian McCafferty in his calls for a rate hike could put further downward pressure on sterling.

Today does see the release of UK industrial and manufacturing production where both are set to rise 0.3%. Considering the shock figure from Germany already this morning investors shouldn’t be surprised if they see a worse than expected number.


Source link  
Politics Influence Markets

With fears abating surrounding the threat of Catalan independence, the EUR moved higher overnight. Catalan President Puigdemont stated...

US Unemployment at Lowest Level

On Friday, the US Department of Labour released Nonfarm Payrolls for September. The meagre forecast of 88K was beaten with an even worse...

Further Strong Data From the US

On Wednesday, the US Institute for Supply Management (ISM) released Non-Manufacturing PMI for September that surprised the market...


Upbeat Data Boosts Dollar

On Monday, the US Institute for Supply Management (ISM) released data showing the index of national factory activity surged to a reading...

Harvey & Irma Effects Still Evident

The EUR suffered a second day of selling pressure, as the markets are growing concerned that the rise in right wing nationalism witnessed...

Risk-On or Risk-Off?

The rhetoric continues between North Korea and the United States with North Korea’s Foreign Minister, Ri Yong Ho, describing President Trump’s recent comments as “tantamount...


German & New Zealand Elections

The results of the German Election have re-elected Chancellor Angela Merkel for a fourth term. Her CDU party won fewer votes than was expected and Chancellor Merkel...

Fed Holds Rates for Now But...

Unsurprisingly, the Federal Reserve kept rates on hold following the end of its 2-day meeting on Wednesday. They did, however, indicate that...

UK Unemployment at 42 Year Low

UK unemployment fell to its lowest level since 1975, data on Wednesday revealed. Unemployment fell by 75K, bringing the unemployment...

  


Share: