BOE MPC - Interest Rates remain at 0.5%

Graham_Devon

Seems the markets are betting that the FED will raise rates in December.

How does this change things for us?

Expectations of a rise in US interest rates in December have soared following a stronger-than-expected jobs report.
The US economy added 271,000 jobs in October, far exceeding the 185,000 jobs that economists had forecast.
That strong number has raised expectations that the US Federal Reserve will raise interest rates at its policy meeting in December.

Though in truth, I reckon given even the slightest get out clause, the FED will hold off.

http://www.bbc.co.uk/news/business-34748027

worldtraveller

Graham_Devon wrote: »

Though in truth, I reckon given even the slightest get out clause, the FED will hold off.

http://www.bbc.co.uk/news/business-34748027

Pretty much everything I'm seeing & hearing is pointing towards a general global slowdown in Q4 and into next year. IMHO these figures are not representative of what has happened over the past couple of months, due to the lag between what's happening on the ground and actual employment rates. I would expect the jobs report to be far worse over the coming months. If the Fed do increase rates later this year I believe it will be a mistake, but one, as usual, largely based on pointless, ivory-towered economists & analysts who don't live in the "real world".

Generali

Graham_Devon wrote: »

Seems the markets are betting that the FED will raise rates in December.

How does this change things for us?



Though in truth, I reckon given even the slightest get out clause, the FED will hold off.

http://www.bbc.co.uk/news/business-34748027

Yellen appears to have stated already that rates will rise in December although, as you say, the Fed does seem to look for any excuse not to increase rates.

TBH I reckon that the Fed will most likely increase rates in December and probably a second time by June although, as always, I caveat that by saying that there's nothing as hard to predict as the future.

Once the Fed starts raising rates the BoE won't be far behind IMHO.

Generali

worldtraveller wrote: »

Pretty much everything I'm seeing & hearing is pointing towards a general global slowdown in Q4 and into next year. IMHO these figures are not representative of what has happened over the past couple of months, due to the lag between what's happening on the ground and actual employment rates. I would expect the jobs report to be far worse over the coming months. If the Fed do increase rates later this year I believe it will be a mistake, but one, as usual, largely based on pointless, ivory-towered economists & analysts who don't live in the "real world".

Employment is a lagging indicator but the leading indicators like the PMI are pointing towards an expanding economy not a contracting one.

The UK services PMI is up to 55:

http://uk.reuters.com/article/2015/11/04/uk-britain-economy-pmi-idUKKCN0ST14B20151104

With the manufacturing PMI even higher:

http://www.tradingeconomics.com/united-kingdom/manufacturing-pmi

What is your source for believing that the economy is slowing?

wotsthat

Graham_Devon wrote: »

Seems the markets are betting that the FED will raise rates in December.

How does this change things for us?

The markets don't make the decision but they've made a better job of forecasting rate rises than central bankers.

It affects us because IMO for all the talk from Carney I think a UK rate rise = US rate rise +/- 3 months.

He did a pretty good job of talking Sterling down though and persuaded me ( and michaels by the sounds of it) to take a 5 year fix because rates were going to definitely rise - I'm a year into that fix!

worldtraveller

Generali wrote: »

What is your source for believing that the economy is slowing?

In my post I was initially referring more to the U.S. job figures, but then the overall global market as well, not really, specifically, the UK market, although I do expect things to slow here as well over the coming months.

My "sources" are people I speak with in my business every day in several global markets, including Asia, the Middle East, Africa & Europe. It's interesting to me that all of them have noted a significant slow down in their business over the past 6-8 weeks. It's obviously not exactly scientific, but my feeling is, as stated, that things are going to slow in most markets over the coming months. As in all these things, time will only tell, of course.

michaels

worldtraveller wrote: »

Pretty much everything I'm seeing & hearing is pointing towards a general global slowdown in Q4 and into next year. IMHO these figures are not representative of what has happened over the past couple of months, due to the lag between what's happening on the ground and actual employment rates. I would expect the jobs report to be far worse over the coming months. If the Fed do increase rates later this year I believe it will be a mistake, but one, as usual, largely based on pointless, ivory-towered economists & analysts who don't live in the "real world".

Generali wrote: »

Yellen appears to have stated already that rates will rise in December although, as you say, the Fed does seem to look for any excuse not to increase rates.

TBH I reckon that the Fed will most likely increase rates in December and probably a second time by June although, as always, I caveat that by saying that there's nothing as hard to predict as the future.

Once the Fed starts raising rates the BoE won't be far behind IMHO.

I think the Baltic Index, Oil and Commodities are all weak which tend to be good pointers for the global economy.

With fraking the US economy has now detached from the rest of the world, don't forget that it is effectively a closed economy as exports/imports are such a small share of gdp.

Which is why I am not sure why there needs to be such a strong link between the us and uk rates as Gen suspects - why not suggest that the uk will soon be doing more qe because europe is doing this? Personally it seems unlikely that the uk will see any cost pressure from labour until the supply of labour from Europe abates. Perhaps it is better to already look at the uk economy as being part of the united states of europe, afterall different us states often diverge widely in performance but share the same interest rate (I accept the analogy is inexact because of sterling but pricing and supply are similar across Europe including the uk and differ from the us)

worldtraveller

worldtraveller wrote: »

In my post I was initially referring more to the U.S. job figures, but then the overall global market as well, not really, specifically, the UK market, although I do expect things to slow here as well over the coming months.

My "sources" are people I speak with in my business every day in several global markets, including Asia, the Middle East, Africa & Europe. It's interesting to me that all of them have noted a significant slow down in their business over the past 6-8 weeks. It's obviously not exactly scientific, but my feeling is, as stated, that things are going to slow in most markets over the coming months. As in all these things, time will only tell, of course.

IMHO, I'm even more concerned now about the current global economy than I was back in November. In the last week I've increased my cash account/cash fund exposure significantly in my ISA & SIPP accounts, by selling units in several equity funds into "cash", to get to a mix level around that which I did back in 2007.

As always, only time will tell!

Thrugelmir

worldtraveller wrote: »

IMHO, I'm even more concerned now about the current global economy than I was back in November.

Just a mere blip in the passage of time. Every dog has it's day. Falling oil price must be hitting the Middle East producers hard in the pocket. Be lots of expats coming home at this rate.

worldtraveller

Thrugelmir wrote: »

Just a mere blip in the passage of time.

Surely, as is every day/week/month/year! But that's all part of the fun of investing, and making your own decisions, should you choose to, right, or wrong.