17 June 2016

Central Bank Rates 

  • Bank Of England rate - on hold at 0.5% and no increase in QE - (next decision 7th July)
  • ECB  - No change at 0.00% - (next decision 7th July)

As it leaves the Bank Rate unchanged for the 87th month, the MPC again warned that uncertainty over the EU referendum is the "largest immediate risk" facing global financial markets.  The committee added that there were "risks of adverse spill-overs to the global economy" if the vote is to leave & in that event it’s "increasingly likely" that sterling would fall further - perhaps sharply. The latest minutes also said that a "vote to leave the EU could materially alter the outlook for [economic] output and inflation".  The MPC added that there was growing evidence that UK businesses & consumers were delaying "major economic decisions" ahead of the referendum, with property & car purchases on hold, along with business investments.  The Bank says it has contingency measures ready to deal with any fall-out from the result, including more support to banks & partnerships with other central banks to help maintain financial stability.  Capital Economics, say a vote to leave the EU means that rates would likely stay on hold for some time, while a remain vote could put a rate rise "back onto the agenda before too long".  One economist commented: "On the increasingly questionable assumption that the UK votes to stay in the EU next Thursday, we expect the Bank of England's eventual next move will be to raise interest rates from 0.5% to 0.75% - but not until May 2017."  Unsurprisingly Vote Leave claimed that: "[The Bank's] overriding objective is to ensure financial stability. This intervention is designed to do the exact opposite."  "What the Bank of England is doing is rather than saying we have the tools at our disposal to be able to deal with any eventuality, they are instead going along with those forecasts that say there will be some kind of meltdown and there just is not the evidence for that."

Bank of England governor Mark Carney has claimed that the Vote Leave campaign has “fundamentally misunderstood” the banks independence & the warnings about  the Referendum. Writing in response to a letter from Vote Leave's Bernard Jenkin MP, Mr Carney criticised "numerous and substantial" mistakes over complaints that he was wrong to say that leaving the EU would cause an economic shock. Mr Jenkin, a director of Vote Leave and chairman of the Public Administration Committee, claimed that the Mr Carney had been wrong to appear on the Andrew Marr show days after he said that leaving the EU could lead to a "technical recession."  Mr Jenkin accuses Mr Carney, saying: "You have already made your views known about the question of the forthcoming referendum.  "The concern is that you, as Governor of the Bank of England, or others who serve the Bank, may have occasion to make further public comment on matters arising from the question on the ballot paper for the referendum.  "You are prohibited from making any public comment, or doing anything which could be construed as taking part in the referendum debate. I have taken legal advice from Speakers' Counsel. . . [and] wanted to take the opportunity to stress the importance of this matter. I very much hope you will avoid doing anything which could suggest you or the Bank have disregarded Parliament's wishes." However Mr Carney struck back saying that he had not "made my views known" on the referendum, adding: "Nor do I intend to share my private opinion other than via the anonymity of [the] ballot box when I join millions of others to cast my vote." Mr Carney points out that Mr Jenkin "demonstrates a fundamental misunderstanding of central bank independence" and that the Bank has "a duty" to report its "evidence-based judgements" to Parliament and the public. Although apparently nudging ahead in the polls, it does appear that the Leave campaign is highly fearful of any comments that dispute it’s “don’t worry everything will be all right” message on the economy. Former Chancellor Alistair Darling (Remain campaign) called Mr Jenkin’s letter "a blatant attempt to muzzle a respected independent voice”, & added that "It is very clear the Leave campaign doesn't want people to hear what the Bank has to say on the most critical issue facing our generation because they don't like its conclusions."

Housing / Mortgage Market

The ONS has said that property prices have risen across the UK with London leading the way up 14.5%. For the UK as a whole prices rose 8.2% in the year to April, meaning the average UK property now stands at £209,054. The North East had the lowest annual growth at just 0.1%. On a monthly basis prices fell in the North East, Wales & the South West, by 0.9%, 1.9% & 2.8% respectively. The new index comprises data from the ONS, Land Registry, Register of Scotland, Land & Property Services, Northern Ireland & the Valuation Office Agency. London’s average property value stood at £470,025 compared to the £121,719 in the North East, while in Wales the annual increase of 1.7% gives an average property value to £139,385. In Scotland the average price was up 3.3% to £138,445. Monthly, the North West had the highest increase up 2.3% on March, while London was up 0.6%. Terraced houses had the biggest annual increase up 10% at an average price of £183,666. Semi-detached property rose 9.7% to £209,075, while flats & maisonettes climbed 9.3% to reach £210,281. Detached houses were up 7.3% to a new high of £332,968.  One industry expert said that without fundamental changes to the supply issue in the UK housing market, further price rises are inevitable, irrespective of any uncertainty a Brexit might cause.

The CML has reported a slowdown in activity during April, mainly due to the expected lull after the March 31st Stamp Duty deadline on second homes & Buy To Let. April’s Buy To Let borrowing was down 65% on March, & down 7% annually to £2.5billion. The number of loans also fell 64% on March to 16,100 down 10% on April 2015. Homeowner purchase borrowing in April was down 40% on March to £8.1billion & 4% annually. Numbers wise the 47,300 loans was down 31% on March & 5% on April 2015.  First-time buyers were also down 11% on March to £3.5billion but up 15% on April last year. The 25,100 loans were a fall of 9% month-on-month & an increase of 7% annually. The average loan size for First Time buyers slipped slightly to £130,000 from £133,000 in March though the income multiple stayed the same at 3.46.  Movers borrowed £4.3billion a drop of 53% on March & down 14% annually. The 22,200 loans were a month-on-month fall of 46% & a 15% drop annually, while the average loan size fell to £162,995 from £180,000 in March. Remortgaging bucked the trend increasing both monthly & annually up 25% on March & 40% year-on-year. There were 34,800 loans a 23% month-on-month increase, which was up 30% annually. The average age of a first-time buyer in April was 30 years old, while for homemovers it was 39. The CML called the figures the “calm after the storm as lending eased back, following the significant rises in activity in March as borrowers looked to beat the second property Stamp Duty deadline”.  They added that they don’t expect lending to return to its previous levels for several months.

The latest figures from the Bank Of England have shown that gross mortgage lending increased by more than 40% in Q1 compared to Q1 2015. The Mortgage Lenders & Administrators quarterly statistics report revealed £64billion mortgage lending in Q1 a 40.4% rise on Q1 2015 & up 1.5% on Q4 2015. Out of Q1’s total 68.9% was for purchase, 0.3% lower than Q4 2015. The value of purchase loans was £44.1billion up 46.8% on Q4 last year. First Time Buyer borrowing was 16.9% down 4% on Q4 2015. However, the value was higher, up £2.2billion to £10.8billion. Buy To Let increased from 15.9% in Q4 to 21.1% in Q1 & up 4.3% annually. The value increased annually £7.7billion in Q1 2015 to £13.5billion in Q1 this year, the highest level since the figures started in 2007.  Also the proportion of loans on fixed rates decreased from 84.1% in Q4 2015 to 81.4% in Q1. The overall average interest rate fell by 0.06% in Q1 to 2.63%, another lowest rate since the series began in 2007.

The RICS has said that property prices are set to fall for the first time since 2012, as increasing uncertainty impedes the market. The latest monthly survey found that prices in central London were already falling, with 35% surveyors reporting a drop in prices in the past month. The report also said that although prices continue to increase gradually across the rest of the country, this is unlikely to remain the case, with 10% of surveyors anticipating a fall in prices over the next three months. London is expected to be worst hit, with 43% of respondents saying that prices will fall over the next quarter, followed by East Anglia, with 33% predicting a drop there. The RICS said the key theme in house prices going forward was “uncertainty”. “It’s evident both on the demand side – our new buyer enquiries series has now fallen for two months in succession – and on the supplier side, new instructions coming on to agents’ books has resumed their downward course after a little blip upwards in the early part of the year.” The report said that near-term indicators are pointing to numbers for the wider market flatlining over the summer, with London remaining a weak spot for a few months to come, & that it was unlikely that a more affordable market will emerge in the near future.

UK

The ONS has said that the unemployment rate has fallen to 5%, which is the lowest since October 2005. Earnings, excluding bonuses, rose by 2.3% annually which was greater than analysts had expected, with pay growth in April itself 2.5%, was partly due to the introduction of the National Living Wage. Earnings including bonuses were up 2% annually.  Public sector employment rose by 6,000, mainly because of a rise in the number of people employed within the NHS, however, the numbers employed in local government fell to a new record low of 2.2 million. Workers employed by private companies was up by nearly half a million over the past. Analysts felt that whilst the employment figures were good, there were still risks ahead, with more recent surveys indicating employers' requirements for new employees has been cooling amid worries about Brexit and a slowing economy.

Also from the ONS was the news that inflation was unchanged in May at 0.3%. Analysts generally feel that the ongoing low rate will keep the bank rate at its current level for some time to come. The Retail Prices Index (RPI), which includes some housing costs, rose to 1.4% in May from 1.3% the month before.  The chief economist at Markit, said the inflation figures added "to the view that no hike in interest rates is on the horizon" and gave "policymakers leeway to add stimulus to the economy if needed".

May’s retail sales volumes increased more than expected by 0.9% compared to April, as UK consumers bought more clothing. Analysts had expected retail volumes to increase by just 0.2% last month. Capital Economics, said: "It appears that Brexit concerns haven't been weighing on consumer spending. Looking ahead, we would expect retail spending to keep up a strong pace." However, the chief economist at Pantheon Macroeconomics, said the slide in prices was the real reason for the strong growth, & warned that the fall in sterling over the past nine months meant retailers faced rising costs that they would soon pass on to consumers, which in turn was likely to slow sales volumes in the second half of this year. The three-month rate, which is less volatile than the monthly figures, rose to 1.5% from 0.9% in April.

Europe 

The latest tranche of Greece’s bailout funds has been approved. 7.5billion euros is scheduled to be paid out early next week, & is being released after the Greek government completed required reforms.

USA

The Fed has kept interest rates at between 0.25% and 0.5% in the face of an uncertain jobs market. The possibility of Brexit was cited as one factors behind the decision to keep interest rates on hold. The US central bank also said it now expected a "slower path" for future rate rises.  Commenting on the UK’s EU referendum Fed chair Janet Yellen said: "Clearly this is a very important decision for the United Kingdom and for Europe. It is a decision that could have consequences for economic and financial conditions in global financial markets. If it does so it could have consequences in turn for the US economic outlook that would be a factor in deciding on the appropriate path of policy."  Although the Fed didn’t say when rates might rise the door has been left open for an increase at the next meeting at the end of July. Ms Yellen added: "Proceeding cautiously and raising our interest-rate target will allow us to verify that economic growth will return to a moderate pace, that the labor market will strengthen further, and that inflation will continue to make progress toward our 2% objective."  The Fed also said that the pace of improvement in the labour market had slowed, but added, however, that "economic activity will expand at a moderate pace and labour market indicators will strengthen" even with gradual rate increases. One analyst called the latest decision: "as dovish as the Fed can get without actually cutting rates."

The Commerce Dept has reported that retail sales increase by more than expected in May. Sales rose by 0.5% last month, after April’s 1.3% rise, & beat analysts expectations of a slowdown last month to 0.3%. Pantheon Macroeconomics called the figures "a solid report.” Whilst other analysts said that people appeared to be more confident about their financial positions, but were tending to spend less on big ticket items such as cars compared with other sectors because of fears about the future.  "Overall, May was not a bad month for retail but the numbers contain warning signs that households are still cautious about spending," said one. "There are also, we have noted from our own consumer polling, rising concerns over future interest rate increases.”

Markets, Swaps. Libor, Gold, Sterling

UK Swap Rates

 Date

2 Year

3 Year

5 Year

10 Year

20 Year

Thurs 16th

0.71

(same)

0.74

(-0.01)

0.85

(-0.01)

N/A

1.45

(-0.02)

Wed 15th

0.71

(same)

0.75

(-0.01)

0.86

(same)

N/A

1.47

(same)

Tues 14th

0.71

(-0.04)

0.76

(-0.02)

0.86

(-0.05)

N/A

1.47

(-0.05)

Mon 13th 

0. 75

(same)

0.78

(-0.01)

0.91

(-0.01)

N/A

1.52

(-0.02)

Fri 10th

0. 75

(+0.01)

0.79

(-0.01)

0.92

(-0.02)

N/A

1.54

(-0.04)

Thurs 9th

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

Wed 8th

0. 74

(same)

0.80

(same)

0.94

(same)

1.32

(-0.01)

1.58

(-0.01)

Tues 7th

0.74

(+0.01)

0.80

(+0.01)

0.94

(same)

1.33

(-0.01)

1.59

(-0.01)

Mon 6th

0.73

(-0.01)

0.79

(same)

0.94

(same)

1.34

(same)

1.60

(+0.01)

Fri 3rd

0.74

(-0.04)

0.79

(-0.07)

0.94

(-0.06)

1.34

(-0.06)

1.59

(-0.07)

UK Libor Rates

Date

1 month 

3 Months Libor

6 Months Libor

12 month Libor

Thurs 16th

0.51

(same)

0.57

(same)

0.71

(same)

0.96

(same)

Wed 15th

0.51

(same)

0.57

(same)

0.71

(-0.01)

0.96

(same)

Tues 14th

0.51

(same)

0.57

(-0.01)

0.72

(same)

0.96

(-0.01)

Mon 13th

0.51

(same)

0.58

(same)

0.72

(same)

0.97

(same)

Fri 10th

0.51

(same)

0.58

(same)

0.72

(same)

0.97

(same)

Thurs 9th

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

Wed 8th

0.51

(same)

0.58

(same)

0.72

(same)

0.97

(+0.01)

Tues 7th

0.51

(same)

0.58

(-0.01)

0.72

(same)

0.96

(-0.03)

Mon 6th

0.51

(same)

0.59

(same)

0.72

(same)

0.99

(same)

Fri 3rd

0.51

(same)

0.59

(same)

0.72

(-0.01)

0.99

(-0.01)

 

Financial Markets - 23rd May – 17th June

Index

23/05/2016

This Week

% Change

FTSE 100

6,140.73

6,018.85

-1.98%

Dax

9,848.00

9,650.84

-2.00%

CAC 40

4,315.21

4,190.88

-2.88%

Index

23/05/2016

This Week

% Change

Dow Jones

17,484.10

17,682.11

+1.13%

S&P 500

2,049.71

2,071.89

+1.08%

Nikkei

16,654.60

15,599.66

-6.33%

Hang Seng

19,809.03

20,169.98

+1.82%

Shanghai Composite

2,813.65

2,885.10

+2.54%

Sydney

5,384.90

5,248.30

-2.54%

Gold

 

Price

Change

%

Forex Gold Index $/oz  

1284.50

+30.30

+2.41

Gold is measured and sold in troy ounces. One troy ounce equals 31.1035 grams or 480 grains. One troy ounce is equal to 1.09711 avoirdupois ounce - widely used to measure weights in the US and UK.

Pound vs US Dollar and Pound vs Euro

 

Sterling v Euro

 

1buys

Change

%

52 Wk-h

52 Wk-l

Euro

1.29170

-0.02450

-1.90

1.43680

1.10650

Sterling v Dollar

 

1buys

Change

%

52 Wk-h

52 Wk-l

US Dollar

1.42930

-0.01730

-1.95

1.71520

1.40950

Central Bank Rates 

  • Bank Of England rate - on hold at 0.5% and no increase in QE - (next decision 7th July)
  • ECB  - No change at 0.00% - (next decision 7th July)

As it leaves the Bank Rate unchanged for the 87th month, the MPC again warned that uncertainty over the EU referendum is the "largest immediate risk" facing global financial markets.  The committee added that there were "risks of adverse spill-overs to the global economy" if the vote is to leave & in that event it’s "increasingly likely" that sterling would fall further - perhaps sharply. The latest minutes also said that a "vote to leave the EU could materially alter the outlook for [economic] output and inflation".  The MPC added that there was growing evidence that UK businesses & consumers were delaying "major economic decisions" ahead of the referendum, with property & car purchases on hold, along with business investments.  The Bank says it has contingency measures ready to deal with any fall-out from the result, including more support to banks & partnerships with other central banks to help maintain financial stability.  Capital Economics, say a vote to leave the EU means that rates would likely stay on hold for some time, while a remain vote could put a rate rise "back onto the agenda before too long".  One economist commented: "On the increasingly questionable assumption that the UK votes to stay in the EU next Thursday, we expect the Bank of England's eventual next move will be to raise interest rates from 0.5% to 0.75% - but not until May 2017."  Unsurprisingly Vote Leave claimed that: "[The Bank's] overriding objective is to ensure financial stability. This intervention is designed to do the exact opposite."  "What the Bank of England is doing is rather than saying we have the tools at our disposal to be able to deal with any eventuality, they are instead going along with those forecasts that say there will be some kind of meltdown and there just is not the evidence for that."

Bank of England governor Mark Carney has claimed that the Vote Leave campaign has “fundamentally misunderstood” the banks independence & the warnings about  the Referendum. Writing in response to a letter from Vote Leave's Bernard Jenkin MP, Mr Carney criticised "numerous and substantial" mistakes over complaints that he was wrong to say that leaving the EU would cause an economic shock. Mr Jenkin, a director of Vote Leave and chairman of the Public Administration Committee, claimed that the Mr Carney had been wrong to appear on the Andrew Marr show days after he said that leaving the EU could lead to a "technical recession."  Mr Jenkin accuses Mr Carney, saying: "You have already made your views known about the question of the forthcoming referendum.  "The concern is that you, as Governor of the Bank of England, or others who serve the Bank, may have occasion to make further public comment on matters arising from the question on the ballot paper for the referendum.  "You are prohibited from making any public comment, or doing anything which could be construed as taking part in the referendum debate. I have taken legal advice from Speakers' Counsel. . . [and] wanted to take the opportunity to stress the importance of this matter. I very much hope you will avoid doing anything which could suggest you or the Bank have disregarded Parliament's wishes." However Mr Carney struck back saying that he had not "made my views known" on the referendum, adding: "Nor do I intend to share my private opinion other than via the anonymity of [the] ballot box when I join millions of others to cast my vote." Mr Carney points out that Mr Jenkin "demonstrates a fundamental misunderstanding of central bank independence" and that the Bank has "a duty" to report its "evidence-based judgements" to Parliament and the public. Although apparently nudging ahead in the polls, it does appear that the Leave campaign is highly fearful of any comments that dispute it’s “don’t worry everything will be all right” message on the economy. Former Chancellor Alistair Darling (Remain campaign) called Mr Jenkin’s letter "a blatant attempt to muzzle a respected independent voice”, & added that "It is very clear the Leave campaign doesn't want people to hear what the Bank has to say on the most critical issue facing our generation because they don't like its conclusions."

 

Housing / Mortgage Market

The ONS has said that property prices have risen across the UK with London leading the way up 14.5%. For the UK as a whole prices rose 8.2% in the year to April, meaning the average UK property now stands at £209,054. The North East had the lowest annual growth at just 0.1%. On a monthly basis prices fell in the North East, Wales & the South West, by 0.9%, 1.9% & 2.8% respectively. The new index comprises data from the ONS, Land Registry, Register of Scotland, Land & Property Services, Northern Ireland & the Valuation Office Agency. London’s average property value stood at £470,025 compared to the £121,719 in the North East, while in Wales the annual increase of 1.7% gives an average property value to £139,385. In Scotland the average price was up 3.3% to £138,445. Monthly, the North West had the highest increase up 2.3% on March, while London was up 0.6%. Terraced houses had the biggest annual increase up 10% at an average price of £183,666. Semi-detached property rose 9.7% to £209,075, while flats & maisonettes climbed 9.3% to reach £210,281. Detached houses were up 7.3% to a new high of £332,968.  One industry expert said that without fundamental changes to the supply issue in the UK housing market, further price rises are inevitable, irrespective of any uncertainty a Brexit might cause.

The CML has reported a slowdown in activity during April, mainly due to the expected lull after the March 31st Stamp Duty deadline on second homes & Buy To Let. April’s Buy To Let borrowing was down 65% on March, & down 7% annually to £2.5billion. The number of loans also fell 64% on March to 16,100 down 10% on April 2015. Homeowner purchase borrowing in April was down 40% on March to £8.1billion & 4% annually. Numbers wise the 47,300 loans was down 31% on March & 5% on April 2015.  First-time buyers were also down 11% on March to £3.5billion but up 15% on April last year. The 25,100 loans were a fall of 9% month-on-month & an increase of 7% annually. The average loan size for First Time buyers slipped slightly to £130,000 from £133,000 in March though the income multiple stayed the same at 3.46.  Movers borrowed £4.3billion a drop of 53% on March & down 14% annually. The 22,200 loans were a month-on-month fall of 46% & a 15% drop annually, while the average loan size fell to £162,995 from £180,000 in March. Remortgaging bucked the trend increasing both monthly & annually up 25% on March & 40% year-on-year. There were 34,800 loans a 23% month-on-month increase, which was up 30% annually. The average age of a first-time buyer in April was 30 years old, while for home movers it was 39. The CML called the figures the “calm after the storm as lending eased back, following the significant rises in activity in March as borrowers looked to beat the second property Stamp Duty deadline”.  They added that they don’t expect lending to return to its previous levels for several months.

The latest figures from the Bank Of England have shown that gross mortgage lending increased by more than 40% in Q1 compared to Q1 2015. The Mortgage Lenders & Administrators quarterly statistics report revealed £64billion mortgage lending in Q1 a 40.4% rise on Q1 2015 & up 1.5% on Q4 2015. Out of Q1’s total 68.9% was for purchase, 0.3% lower than Q4 2015. The value of purchase loans was £44.1billion up 46.8% on Q4 last year. First Time Buyer borrowing was 16.9% down 4% on Q4 2015. However, the value was higher, up £2.2billion to £10.8billion. Buy To Let increased from 15.9% in Q4 to 21.1% in Q1 & up 4.3% annually. The value increased annually £7.7billion in Q1 2015 to £13.5billion in Q1 this year, the highest level since the figures started in 2007.  Also the proportion of loans on fixed rates decreased from 84.1% in Q4 2015 to 81.4% in Q1. The overall average interest rate fell by 0.06% in Q1 to 2.63%, another lowest rate since the series began in 2007.

The RICS has said that property prices are set to fall for the first time since 2012, as increasing uncertainty impedes the market. The latest monthly survey found that prices in central London were already falling, with 35% surveyors reporting a drop in prices in the past month. The report also said that although prices continue to increase gradually across the rest of the country, this is unlikely to remain the case, with 10% of surveyors anticipating a fall in prices over the next three months. London is expected to be worst hit, with 43% of respondents saying that prices will fall over the next quarter, followed by East Anglia, with 33% predicting a drop there. The RICS said the key theme in house prices going forward was “uncertainty”. “It’s evident both on the demand side – our new buyer enquiries series has now fallen for two months in succession – and on the supplier side, new instructions coming on to agents’ books has resumed their downward course after a little blip upwards in the early part of the year.” The report said that near-term indicators are pointing to numbers for the wider market flat lining over the summer, with London remaining a weak spot for a few months to come, & that it was unlikely that a more affordable market will emerge in the near future.

UK

The ONS has said that the unemployment rate has fallen to 5%, which is the lowest since October 2005. Earnings, excluding bonuses, rose by 2.3% annually which was greater than analysts had expected, with pay growth in April itself 2.5%, was partly due to the introduction of the National Living Wage. Earnings including bonuses were up 2% annually.  Public sector employment rose by 6,000, mainly because of a rise in the number of people employed within the NHS, however, the numbers employed in local government fell to a new record low of 2.2 million. Workers employed by private companies was up by nearly half a million over the past. Analysts felt that whilst the employment figures were good, there were still risks ahead, with more recent surveys indicating employers' requirements for new employees has been cooling amid worries about Brexit and a slowing economy.

Also from the ONS was the news that inflation was unchanged in May at 0.3%. Analysts generally feel that the ongoing low rate will keep the bank rate at its current level for some time to come. The Retail Prices Index (RPI), which includes some housing costs, rose to 1.4% in May from 1.3% the month before.  The chief economist at Markit, said the inflation figures added "to the view that no hike in interest rates is on the horizon" and gave "policymakers leeway to add stimulus to the economy if needed".

May’s retail sales volumes increased more than expected by 0.9% compared to April, as UK consumers bought more clothing. Analysts had expected retail volumes to increase by just 0.2% last month. Capital Economics, said: "It appears that Brexit concerns haven't been weighing on consumer spending. Looking ahead, we would expect retail spending to keep up a strong pace." However, the chief economist at Pantheon Macroeconomics, said the slide in prices was the real reason for the strong growth, & warned that the fall in sterling over the past nine months meant retailers faced rising costs that they would soon pass on to consumers, which in turn was likely to slow sales volumes in the second half of this year. The three-month rate, which is less volatile than the monthly figures, rose to 1.5% from 0.9% in April.

Europe 

The latest tranche of Greece’s bailout funds has been approved. 7.5billion euros is scheduled to be paid out early next week, & is being released after the Greek government completed required reforms.

USA

The Fed has kept interest rates at between 0.25% and 0.5% in the face of an uncertain jobs market. The possibility of Brexit was cited as one factors behind the decision to keep interest rates on hold. The US central bank also said it now expected a "slower path" for future rate rises.  Commenting on the UK’s EU referendum Fed chair Janet Yellen said: "Clearly this is a very important decision for the United Kingdom and for Europe. It is a decision that could have consequences for economic and financial conditions in global financial markets. If it does so it could have consequences in turn for the US economic outlook that would be a factor in deciding on the appropriate path of policy."  Although the Fed didn’t say when rates might rise the door has been left open for an increase at the next meeting at the end of July. Ms Yellen added: "Proceeding cautiously and raising our interest-rate target will allow us to verify that economic growth will return to a moderate pace, that the labor market will strengthen further, and that inflation will continue to make progress toward our 2% objective."  The Fed also said that the pace of improvement in the labour market had slowed, but added, however, that "economic activity will expand at a moderate pace and labour market indicators will strengthen" even with gradual rate increases. One analyst called the latest decision: "as dovish as the Fed can get without actually cutting rates."

The Commerce Dept has reported that retail sales increase by more than expected in May. Sales rose by 0.5% last month, after April’s 1.3% rise, & beat analysts expectations of a slowdown last month to 0.3%. Pantheon Macroeconomics called the figures "a solid report.” Whilst other analysts said that people appeared to be more confident about their financial positions, but were tending to spend less on big ticket items such as cars compared with other sectors because of fears about the future.  "Overall, May was not a bad month for retail but the numbers contain warning signs that households are still cautious about spending," said one. "There are also, we have noted from our own consumer polling, rising concerns over future interest rate increases.”

Markets, Swaps. Libor, Gold, Sterling

UK Swap Rates

 Date

2 Year

3 Year

5 Year

10 Year

20 Year

Thurs 16th

0.71

(same)

0.74

(-0.01)

0.85

(-0.01)

N/A

1.45

(-0.02)

Wed 15th

0.71

(same)

0.75

(-0.01)

0.86

(same)

N/A

1.47

(same)

Tues 14th

0.71

(-0.04)

0.76

(-0.02)

0.86

(-0.05)

N/A

1.47

(-0.05)

Mon 13th 

0. 75

(same)

0.78

(-0.01)

0.91

(-0.01)

N/A

1.52

(-0.02)

Fri 10th

0. 75

(+0.01)

0.79

(-0.01)

0.92

(-0.02)

N/A

1.54

(-0.04)

Thurs 9th

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

Wed 8th

0. 74

(same)

0.80

(same)

0.94

(same)

1.32

(-0.01)

1.58

(-0.01)

Tues 7th

0.74

(+0.01)

0.80

(+0.01)

0.94

(same)

1.33

(-0.01)

1.59

(-0.01)

Mon 6th

0.73

(-0.01)

0.79

(same)

0.94

(same)

1.34

(same)

1.60

(+0.01)

Fri 3rd

0.74

(-0.04)

0.79

(-0.07)

0.94

(-0.06)

1.34

(-0.06)

1.59

(-0.07)

UK Libor Rates

Date

 1 Month

3 Months Libor

6 Months Libor

12 month Libor

Thurs 16th

0.51

(same)

0.57

(same)

0.71

(same)

0.96

(same)

Wed 15th

0.51

(same)

0.57

(same)

0.71

(-0.01)

0.96

(same)

Tues 14th

0.51

(same)

0.57

(-0.01)

0.72

(same)

0.96

(-0.01)

Mon 13th

0.51

(same)

0.58

(same)

0.72

(same)

0.97

(same)

Fri 10th

0.51

(same)

0.58

(same)

0.72

(same)

0.97

(same)

Thurs 9th

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

Wed 8th

0.51

(same)

0.58

(same)

0.72

(same)

0.97

(+0.01)

Tues 7th

0.51

(same)

0.58

(-0.01)

0.72

(same)

0.96

(-0.03)

Mon 6th

0.51

(same)

0.59

(same)

0.72

(same)

0.99

(same)

Fri 3rd

0.51

(same)

0.59

(same)

0.72

(-0.01)

0.99

(-0.01)

Financial Markets –  23rd May – 17th June

Index

23/05/2016

This Week

% Change

FTSE 100

6,140.73

6,018.85

-1.98%

Dax

9,848.00

9,650.84

-2.00%

CAC 40

4,315.21

4,190.88

-2.88%

Index

23/05/2016

This Week

% Change

Dow Jones

17,484.10

17,682.11

+1.13%

S&P 500

2,049.71

2,071.89

+1.08%

Nikkei

16,654.60

15,599.66

-6.33%

Hang Seng

19,809.03

20,169.98

+1.82%

Shanghai Composite

2,813.65

2,885.10

+2.54%

Sydney

5,384.90

5,248.30

-2.54%

Gold

 

 

Price

Change

 % 

Forex Gold Index $/oz 

1284.50

+30.30

+2.41

Gold is measured and sold in troy ounces. One troy ounce equals 31.1035 grams or 480 grains. One troy ounce is equal to 1.09711 avoirdupois ounce - widely used to measure weights in the US and UK.

Pound vs US Dollar and Pound vs Euro

Sterling v Euro

 

1buys

Change

%

52 Wk-h

52 Wk-l

Euro

1.29170

-0.02450

-1.90

1.43680

1.10650

Sterling v Dollar

1buys

Change

%

52 Wk-h

52 Wk-l

US Dollar

1.42930

-0.01730

-1.95

1.71520

1.40950


Legal

YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY DEBT SECURED ON IT.

John Charcol is a trading name of John Charcol Limited and its Appointed Representatives. John Charcol Limited is authorised and regulated by the Financial Conduct Authority. The Financial Services Register number is 665649. Registered in England No. 9157892. Registered office address for John Charcol Limited is 5th Floor, Cutlers Exchange, 123 Houndsditch, London, EC3A 7BU. The FCA does not regulate some investment mortgage contracts. Calls may be recorded for training and monitoring.