Wise Money eyes turn to next week
The reaction to the combination of yesterday's UK data and US rate moves was baffling to say the least.
One would have assumed that the combination of much better than expected UK retail sales figures (a fall of 0.1% against expectations of a 0.8% drop) and a sharp drop in US Treasury yields might have given cable a bit of a leg up enabling it to hold above the important 1.5030 level.
As it happens, the total opposite occurred, with Sterling losing ground against all the majors and one must conclude that it is concern about i) the UK economy ii) the continued move for sharply lower UK interest rates iii) the UK Government's exchange rate policy.
There are strong negatives associated with all three factors and so, ahead of Mr Darling's pre-budget statement on Monday, we are likely to see Sterling vulnerable to the downside.
Sterling LIBOR rates continue their orderly march lower with rates opening another 4-5 basis points lower than yesterday's opening levels. This steady decline must tail off as we approach the next MPC meeting but with expectations of (at least) a 0.50% cut to be announced on the 4th December, rates will likely resume the move lower after that date.
I would anticipate seeing the yield curve steepen unless the Chancellor introduces any of the dreaded âquantitative measures' in his statement to try and force rates lower across the spectrum.
Developments and data from the US yesterday continued to weigh upon both the currency and the stock market with appalling jobs data and ongoing concerns over the future of the US automotive industry the major factors.
Representatives from Detroit, arriving at Capitol Hill, begging bowls in hand (having flown in by private jet !!!!) were told to go away, think about their proposals and come back early next month with more appropriate requests.
Wall Street was spooked by rumours of problems with the BoA/Merrills merger and with the re-capitalisation measures being attempted by Citibank. The number of American workers on the US unemployment register surged to a 25-year high, climbing by 542k to about 4 million. If the economy is turning round, its not yet apparent.
The contents of this blog are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. The Wise Money Blog cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
One would have assumed that the combination of much better than expected UK retail sales figures (a fall of 0.1% against expectations of a 0.8% drop) and a sharp drop in US Treasury yields might have given cable a bit of a leg up enabling it to hold above the important 1.5030 level.
As it happens, the total opposite occurred, with Sterling losing ground against all the majors and one must conclude that it is concern about i) the UK economy ii) the continued move for sharply lower UK interest rates iii) the UK Government's exchange rate policy.
There are strong negatives associated with all three factors and so, ahead of Mr Darling's pre-budget statement on Monday, we are likely to see Sterling vulnerable to the downside.
Sterling LIBOR rates continue their orderly march lower with rates opening another 4-5 basis points lower than yesterday's opening levels. This steady decline must tail off as we approach the next MPC meeting but with expectations of (at least) a 0.50% cut to be announced on the 4th December, rates will likely resume the move lower after that date.
I would anticipate seeing the yield curve steepen unless the Chancellor introduces any of the dreaded âquantitative measures' in his statement to try and force rates lower across the spectrum.
Developments and data from the US yesterday continued to weigh upon both the currency and the stock market with appalling jobs data and ongoing concerns over the future of the US automotive industry the major factors.
Representatives from Detroit, arriving at Capitol Hill, begging bowls in hand (having flown in by private jet !!!!) were told to go away, think about their proposals and come back early next month with more appropriate requests.
Wall Street was spooked by rumours of problems with the BoA/Merrills merger and with the re-capitalisation measures being attempted by Citibank. The number of American workers on the US unemployment register surged to a 25-year high, climbing by 542k to about 4 million. If the economy is turning round, its not yet apparent.
The contents of this blog are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. The Wise Money Blog cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
Labels: global recession, interest rates, UK recession, US Dollar, wise money
posted by Dr Search- Principal Consultant at the Search Clinic @ 9:01 AM
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