US GDP economy grows by 2.9%

Friday’s GDP data release showed that the US economy grew at its fastest pace for 2 years in the 3rd quarter of this year.

Friday’s GDP data release showed that the US economy grew at its fastest pace for 2 years in the 3rd quarter of this year.

This positive news gives the Federal Reserve a huge backing with regards to their likely interest rate change in December. The growth was predicted to be around 2.5% but they have outdone themselves with a figure of 2.9%.

Consumer spending (making up two thirds of the world’s biggest economy) was a key factor in the positive numbers. The election campaign is expected to make for a volatile November for the dollar, but there is no major concern now for Yellen and co to make their expected move come December’s rate hike.

With a number of key figures in the UK recently resigning, being sacked or promoted, Mark Carney is said to have agreed to stay in his key role long term.

This has no doubt left some relieved as the Bank of England met with both Theresa May and Philip Hammond this week. There was some uncertainty around the Bank of England governor, but rumours have surfaced this weekend that he has agreed to stay in his position for the full 8 years expected of him.

Wise Money sees Super Thursday back this week

Super Thursday is back this week, as Mark Carney delivers what is expected to be a no change in terms of interest rates. There were hints at a second rate cut in the UK post Brexit, but a continued surprise in healthy data has left senior figures with no doubt that a downgrade in rates is not required.

Today we have Eurozone Consumer confidence, Gross Domestic Product, with German Retail Sales of note in terms of key data.

ECB monetary policy left unchanged

Sterling is higher this morning against the euro, after the European Central Bank’s (ECB) meeting at lunchtime yesterday failed to deliver any significant change.

Sterling is higher this morning against the euro, after the European Central Bank’s (ECB) meeting at lunchtime yesterday failed to deliver any significant change.
The ECB left monetary policy unchanged, as expected, with the refinancing rate remaining at 0.00% and the deposit rate at -0.4%. The euro briefly spiked higher after Mario Draghi said that there was no discussion, either on tapering the QE programme or extending it beyond the original deadline of March 2017.

Whilst sterling finished strongly on the euro, it wasn’t reciprocated on the US dollar, as strong US housing data released had the greenback soaring late in the session.

Portugal’s government bond yields at six week interst rates low

This morning, Portugal’s government bond yields are hovering near six week lows, ahead of a key review by Canadian ratings firm DBRS, out after the close of play today. Whilst this is slightly concerning for Portugal, they are expected to get through the test unscathed. If it were to be downgraded, it would fall out of the ECB’s QE programme.

Wise Money news to come

Today is fairly thin in terms of wise money news data, however we do have UK public finance figures out this morning. Whilst expected in lower than last month’s number, a lower figure shouldn’t dampen Sterling’s resurgence on the euro too much. Aside from this, most of the day will be spent interpreting the ECB press conference from yesterday, with many investors keenly watching Sterling/euro advances.

Brexit good news- Boris Johnson believes in good deal to access the single market

Foreign Secretary Boris Johnson believes that Brexit will be a good deal to access the single market. Foreign Secretary Boris Johnson believes that Brexit will be a good deal to access the single market.

After a steady flow of positive data in the UK, Foreign Secretary Boris Johnson, suggested anti-Brexit campaigners have got it wrong.

Standing in front of a select Foreign Affairs committee, he said that the EU would be wrong to ‘punish’ the UK for leaving, also commenting that Brits will still drink champagne and be the biggest importer of German cars than any other.

It’s his belief that the UK will get a good deal regarding access to the single market, whilst gaining freer access to the global market.

There’s good news for rent payers, as the rate of rent increase grew at its slowest pace in September this year, thanks to the decision of landlords to absorb the growing tax rates rather than pass them onto already high-paying renters.

With a tax reduction in buy to let properties expected in April 2017, landlords seem to have decided to let the slight increase slide, keeping tenants happier as new contracts currently average just over £900 per month. In London, the cost actually fell 0.8% which will no doubt be good news for those looking to move in the city.

Janet Yellen rounds up the week at Boston conference

After a thin day of data yesterday and slight GBP fightback, today’s US Advanced Retail Sales & the University of Michigan Confidence report are the key pieces of data available, whilst Janet Yellen finalises the weeks trading with a conference in Boston.

Wise Money watches FED eyeing US data

The US FED is watching the to non manufacturing data to decide on interest rate hike.

The US FED is watching the to non manufacturing data to decide on interest rate hike.

Sterling has started the week on the front foot after last week’s positive manufacturing PMI print coupled with a better than expected services PMI sector. With Friday’s US non farm payroll data falling considerably short of expectations, the Pound rallied and GBPUSD currently finds itself trading just over the 1.33 mark.

The weak print from the US jobs data put pressure back on the Federal Reserve on the interest rate decision given that they were so heavily banking on employment numbers. At the Jackson Hole symposium last month, Janet Yellen and various Fed members were fairly hawkish on increasing interest rates but the fall in job growth has meant that analysts are now expecting the next hike in December at the earliest, if any.

However, later today, we are expecting data from the US including ISM non-manufacturing composite numbers which will be heavily watched by the markets as it could be the last resort to finalise any action from the Federal Reserve.

GDP revisions and retail PMI numbers expected from the Eurozone

From the Eurozone, second quarter GDP revisions and August’s retail PMI numbers are out today which could put further pressure on the euro. Last week’s manufacturing PMI data fell well short of expectations from the Eurozone and news flow and economic sentiment have rapidly deteriorated over the past fortnight.

Given such uncertainty, all eyes will turn to the ECB meeting later this week as markets are preparing themselves to see what stimulus measures the European Central Bank will further undertake.

In the midst of weak data from the US and the Eurozone, coupled with surprisingly positive data prints from the UK, Sterling seems to be enjoying a steady consolidation phase for the moment although any sharp moves up are fairly limited due to the uncertainty and forthcoming negotiations on how ‘Brexit’ will pan out.

A 10 year treasury gilt auction makes for the sole activity on the economic calendar for the UK today.

Wise Money waiting for key US data on Friday

Today we have US employment data which will give us a taster as we build up to the key non farm payroll data on Friday.

wisemoney US employment data which will give us a taster as we build up to the key non farm payroll data on Friday.

Feedback from the labour market is the highest consideration, as the FOMC judge whether it is appropriate to increase interest rates. On Friday the payroll data is expected to come in at a healthy 175k, and average earnings are likely to increase by 0.2%.

We could also see the unemployment rate fall slightly to 4.8% from 4.9%. If we see positive US data this week, it will build expectations for a September rate hike and lead to USD gains.

Eurozone inflation softer for August

In the Eurozone, CPI for August (y/y) has come in slightly softer than expected at 0.2% vs 0.3% expected. In addition, the unemployment rate for July has been confirmed at 10.1% which is in line with forecast. This morning the euro has been on the back foot and disappointing inflation data will not help this trend.

Pound finds tentative momentum

The Pound has managed to pick up this morning against the euro and the USD. Following a better run of UK data this week, the pound is finding some tentative momentum. Tomorrow we have UK Manufacturing PMI, and on Friday Construction PMI to give further feedback for the UK economy.

Pound up after bank holiday weekend

After the 3 day weekend, the markets have opened up after fully digesting the Fed Jackson Hole meeting with the Pound increasing over the bank holiday weekend.

After the 3 day weekend, the markets have opened up after fully digesting the Fed Jackson Hole meeting with the Pound increasing over the bank holiday weekend.

Janet Yellen’s suggestion that a rate rise is still likely has seen the FTSE strengthen again by 0.3%, but oil has stated to come under renewed pressure.

With a hike now potentially in September a real possibility, Brent Crude found itself trading below $50 per barrel once more and with that, the price for those who do not hold US Dollars as their base currency will find all oil based products more expensive to purchase.

Number of investments coming into UK at year high

The number of investments that come into the UK was at a year high, up a big 11%.

A number of the 116,000 jobs created were said to have been created from overseas investments, also showing the UK as the most appealing region in Europe to do business.

A number of reasons were given as to why the UK attracts so well, such as the English language (spoken globally), fair tax and EU membership, which could now become a hindering block after Article 50 is triggered.

Today’s key data is mixed in terms of geography, with UK Mortgage Approvals, Fed’s Fischer speaking on Bloomberg and German Consumer Price Index out today which may move the markets.

Sterling performs well thanks to record UK jobless

Sterling had a much better day trading yesterday against all its major currency pairings, as the UK Jobless Claims total fell to a record 1.64 million.

Sterling had a much better day trading yesterday against all its major currency pairings, as the UK Jobless Claims total fell to a record 1.64 million.

The numbers from April to June showed that the total fell by just over 50,000, with official figures indicating 31.75m people (74.5%) are currently in work.

Wages with and without bonus’ also showed gains, as the current claimant count for July displayed an 8,000 drop in actual claimants since the surprise Brexit vote.

Conversely Fed Reserve hints at interest rate hike

The minutes of July’s Federal Reserve meeting has hinted at another interest rate hike before the end of the year, but there was a clear division between members.

The FOMC looked to be nearing another move, as job growth and the sharp market recovery (post Brexit) has been a major factor; but a low inflation figures lack of rise, and staying towards its 2% target is still a concern.

With unemployment levels in the US below 5%, one Fed Member, Esther George, wanted a further hike in rates as ‘the economy is at or near full employment’.

Money news to come

Today we see GBP Retail Sales, Eurozone Construction Output & Consumer Price Index, along with Initial Jobless Claims and Continuing Claims.

UK interest rates cut to 0.25%

The Bank of England’s has cut interest rates by half to a new record low of 0.25%.

Bank of England’s cut interest rates by half to a new record low of 0.25%.

In addition the Bank of England (BOE) launched a massive stimulus package designed to save the UK economy from recession.

The Bank of England’s Monetary Policy Committee (MPC) voted unanimously to slash interest rates to an all time low; they also hinted that it might cut rates “close to but a little above zero” and could unleash more Quantitative Easing if needed.

With a 60 billion government bond buying program and a new initiative to buy 10 billion pounds of corporate bonds, the Bank of England hope to support the necessary adjustments in the UK economy following Brexit.

Mark Carney and the Bank of England think that the outlook for growth has “weakened materially” and they anticipate that the pain will be felt in 2017 as their Quarterly Report shows 2017 forecast slashed from 2.3% to 0.8%, the largest downgrade to its growth forecast to date.

Inflation is forecasted to increase thanks to the weakness of the pound, with the Central Bank now anticipating to hit their 2% target in Q4 of 2017 as opposed to Q2 of 2018 as previously anticipated.

The unemployment rate is also expected to rise to 5.4% in Q3 2016 compared to a previous forecast of 4.9%.

From the US to Europe, other data to come

After Super Thursday, the market will look at the US non-farm payrolls. Following the strong increase in June, a majority of economists are now expecting a weaker number with job growth around 180,000 as Wednesday’s ADP employment report showed signs of softness in the employment components of both ISM reports.

Looking at the day ahead the rest of the data due out in Europe will be overshadowed. Germany factory orders numbers for June, the latest trade balance reading for France and the latest UK house price data are the main data this morning before the market turns its eyes to the July employment report in the US.

Theresa May wastes no time in planning UK’s Brexit strategy

Theresa May is wasting no time in planning the UK’s Brexit strategy as she travels to Germany and France for discussions.

Theresa May is wasting no time in planning the UK's Brexit strategy as she travels to Germany and France for discussions.

Two of the more significant economies of the EU are keen to meet and begin discussions about an exit plan with the new PM. They have both stressed that no in depth proposals will be looked at until Article 50 is triggered.

Canada is the latest country to have ‘shown interest’ in the form of a trade deal to the UK since the referendum outcome, which if true will no doubt have investors starting to believe in the pound again. Other stronger nations such as the US, Australia and India to name a few have also potentially sounded out a trade deal.

London mayor launches #LondonIsOpen

London Mayor Sadiq Khan has been on the front foot this week, launching #LondonIsOpen, aimed to keep investors ploughing their funds into UK Markets and hoping to keep tourists flocking to major parts of the UK. The campaign has been backed by senior political figures, business leaders and celebrities alike.

Today we get to digest data from the UK & EU, with GBP Consumer Price Index figures out at 0.5% against previous showing of 0.3% which has boosted the pound slightly plus German ZEW Survey.

US Dollar surges after non farm payroll boost

The US Dollar received a boost in trading, as did stock markets after the non farm payroll report was released.

The US Dollar received a boost in trading, as did stock markets after the non farm payroll report was released.

With job numbers in the US soaring by 287,000, way above the 170,000 expected number; investors flocked to the US dollar to find stable ground, as uncertainty lingers in the Eurozone after the Brexit vote in the UK.

However, gains were slightly capped for the Greenback, as average weekly earnings are still muted, though markets still seem to be moving towards a risk off scenario.

Despite the strong labour report, talks of an interest rate hike seem to be off the table for the near future from the Federal Reserve, as we move back into market consolidation mode.

As far as economic data goes, the US starts us off with the Conference Board Employment Trends Index and the Federal Labour Market Conditions Index, coupled with a speech by FOMC member George.

Concerns over Italian banks mount

Meanwhile in the eurozone, concerns over Italian banks continue to mount, though analysts still insist that internal stress tests for the banks reveal they are resilient and do not need any bailout funds. Euro area finance ministers are due to meet in Brussels today on a fairly quiet start to the week on the economic calendar.

Sterling subdued

Sterling remains subdued and under pressure after the Brexit vote; as markets are likely to remain in limbo until we have a leader of the Conservative Party to carry out the trigger to Article 50. The pound has slid down further after Friday’s positive US data, and currently GBP/USD is trading well below the 1.30 level.

Most of the focus for the UK currency markets will be on tomorrow’s speech by Bank of England Governor Mark Carney on financial stability and the inflation report hearings to provide further direction. The BRC Retail Sales Monitor is due for release today and will provide interim direction for the pound.