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Market Update

The Federal Reserve of the US and Bank of England of the UK both kept interest rates on hold last week. With the markets expecting no changes in rates and Quantitive easing; they were however looking for some forward guidance as to when an interest rate hike may come. The Fed are currently monitoring employment figures and inflation. Jerome Powell, Fed Chair did mention he need not see a “knockout, great, super strong employment report”. A reasonable reading would be satisfactory to consider moving rates. As it stands, a hike is likely to come in the second half of 2022.

The UK is closer to its first interest rate rise since the pandemic after two of nine member voted to tighten policy to balance inflation, whilst others agreed that uncertainty revolving around Covid need be the focus. An interest rate hike for the UK is currently priced in for the early part of 2022 – as early as February. With surging energy costs, labour shortages and chaos in the supply chain; The UKs recovery from the pandemic will certainly be of key importance before an interest rate rise comes

This week we will have a bout of data releases which will certainly be worth keeping an eye on starting with US Durable Goods Orders MoM (Expected to rise from a negative 0.1% reading last month) and speeches from both Bank of England Governor Andrew Bailey and Fed President Williams. Consumer Confidence for both Germany and the US to be released tomorrow and are expected to rise. On Wednesday, we have GDP Growth Rate year-on-year for the UK which is forecasted to rise massively from -6.1% to 22.2%. Unemployment Change and Rate for Germany is will be released shortly after. On Friday morning, we have PMI data for Eurozone, Germany & the UK. Friday afternoon the US will release it’s PCE Price Index and PMI Data.

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