The economy post-Brexit: More QE or cutting interest rates? The UK’s poor productivity’s the real elephant in the room August 2, 2016 Uncertainty over the health of the global economy persists, as a checkered patchwork of data releases add to speculation over what the future holds. In the UK, the Brexit vote has amplified worries about the economy. “It remains hard to see how the UK can avoid recession altogether, possibly starting as soon as the third quarter,” [...]
Anticipation of $20bn Microsoft bond to finance LinkedIn deal drives up US Treasury yields August 1, 2016 US Treasury yields rose today in anticipation of a $19.75bn (£14.93bn) bond offering from Microsoft to finance its takeover of LinkedIn. The tech giant is expected to imminently launch the seven-tranche US dollar bond. Orders for the bond have reached more than $30bn, while 30-year yields hit a session high today of 2.244 per cent, Reuters reported. Yields [...]
There is a 98 per cent chance the Bank of England will cut interest rates August 1, 2016 The Bank of England is almost certain to slash interest rates when its rate-setting monetary policy committee (MPC) meets for the second time since the EU referendum this week. Futures markets indicate there is a 98.1 per cent probability the MPC will cut rates to a new record-low of 0.25 per cent, slightly up on [...]
India’s largest mortgage lender issues world’s first “Masala bond” in London August 1, 2016 The world's first ever "masala" bond has been issued in London today, in what chancellor Philip Hammond described as a major win for the UK economy in the aftermath of the EU referendum. India's largest mortgage provider, Housing Development Finance Corporation (HDFC), became the first Indian company to list corporate rupee-denominated debt outside of India, with the [...]
Manufacturing stutters forward in the Eurozone as PMI dips slightly August 1, 2016 Factories in the Eurozone entered the summer with a slight wobble, as output dipped and fundamental weaknesses in the manufacturing sector appeared stubborn. The purchasing managers' index (PMI) for manufacturing across the single currency bloc slipped to 52 in June, down from 52.8 in July, on a reading where scores above 50 mark expansion. It [...]
UK manufacturing PMI sinks even lower after EU referendum August 1, 2016 The most up-to-date measure of economic output among UK manufacturers has slumped to its lowest level in more than three years following the EU referendum. The manufacturing purchasing managers' index (PMI), which is closely watched by policymakers at the Bank of England, dropped to 48.2 in July, from 52.4 in June. That was even lower than a [...]
Fresh delay for US rate hike on weak growth figures August 1, 2016 The prospect of a second US interest rate rise since the recession has slipped back following weak GDP data and some dovish comments from one of the Federal Reserve's key rate-setters. Futures markets now indicate the probability of a rate rise by the end of the year is less than one in three, down from around [...]
Asian shares climb on weak US and Eurozone growth figures August 1, 2016 Asian shares climbed higher overnight everywhere except China as markets benefitted from Friday’s weak growth figures in both the US and the Eurozone. Japan’s Nikkei 225 added 0.4 per cent to hit 16,635, largely unchanged on its level before the Bank of Japan (BoJ) decided on Friday to hold back on fresh stimulus. In Hong [...]
As French growth grinds to a halt, is the country’s economic model fundamentally broken? August 1, 2016 Tim Worstall, senior fellow of the Adam Smith Institute, says Yes. France’s economic model is irretrievably broken. Along one axis we have a spectrum of possible economic models. We can have low tax and redistribution market economies and high tax and redistribution ones. Non-market economies do not work. Further, the more we tax and redistribute, the [...]
Week ahead: Banks take centre stage for results and interest rates August 1, 2016 The Bank of England is widely expected to cut interest rates for the first time in seven years this week as it assesses the fallout from the UK’s vote to quit the European Union. The Bank held fire in July in the immediate aftermath of the Brexit vote, catching some analysts off guard. Policy committee members [...]