Archive - February, 2015

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Over the last few decades Chinese growth figures have been the envy of central banks around the globe. The back-to-back years of double digit GDP have now slowed to “only” around 7%. Recent macro data from China has disappointed markets, with the indicators pointing to a further slowdown in economic growth. The expansion has been coupled with inflation, however data released in January reported a 5 year low. On the 4 February the PBOC attempted to stave off a further slowdo…

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Macro Outlook UK General election A major potential risk for Sterling over the short to mid-term is the potential of an inconclusive majority in government with the coalition discussions being drawn out. The recent polls for the election don’t show a conclusive majority for either of the major political parties, with one of the minor parties expected to be the maker of any coalition leadership. Bank of England rate hike The market has priced in a rate hike for Q…

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The FTSE 100 is edging closer to its all-time record high reached on the final day of trading in 1999 at the height of the tech bubble. The components of the index are heavily weighted by financial and commodity companies that have had significant declines over the last 15 years. The index is isn’t a proxy for the growth of the UK economy due to the high percentage of global exposure from earnings for the components. FTSE 100 currently trading 6910, the record intra-day high is 6…

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Greece is currently in final talks with Eurozone finance ministers regarding the countries impending bailout. If no agreement is met, then ultimately Greece would be unable to make its debt repayments and default on its obligations. This would then set a painful set of events, as Greece leaves the single currency, with measures such as currency controls. The Euro wasn’t developed with an exit plan built in, so the move would have disastrous effects for the Mediterranean country.…

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The Bank of England minutes for 4 and 5 February headline announcements were as expected, the MPC voted unanimously (9-0) to leave interest rates and quantitative easing unchanged. The current ultra-loose monetary policy is interest rates at the record low of 0.50% and asset purchases (QE) at £375bn. The ONS released the ILO Unemployment for February with the rate dropping to 5.7% below expectations of 5.8%. The UK claimant count fell to 823,000 in January, lowest since May 2008,…

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The latest inflation data released from the ONS shows is the lowest in 25 years, well below the Bank of England’s target of 2%. During the height of the economic crisis, inflation continually overshot the central bank’s target at a time of austerity and increases in unemployment. Wage stagnation and high inflation led to a squeeze on wage growth and played its part in a slow economic recovery. When inflation overshoots targets the normal practice is to raise interest rates…

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Today is a public holiday in the US (President's Day), volumes are likely to be lighter in afternoon, and certain trading hours are affected. The above trading times are dependent on our liquidity providers, and are accurate to the best of our knowledge. If you have any questions regarding the trading hours please contact us.…

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The situation in Greece continues to dominate the markets and news flow. The recent election of the anti-austerity Syriza party has led to uncertainty as to whether Greece will leave the single currency. Alexis Tsipras the new PM, is locked in crucial talks to negotiate funds to ensure that the country doesn’t default on its commitments. With only two weeks of leadership, the moves by Tsipras are radical, and could have catastrophic repercussions. An exit from the Eurozone would…

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The Greek people elected a new government to power on the 25th January; Syriza are an anti-austerity party led by Alexis Tsipras. They were elected as the people have suffered through the stringent austerity measures dictated under international bailout agreements. Without an end insight and significant economic improvement the Greek people have voted for change. Greece’s financial stability and future EU membership is in question, as Tsipras attempts to negotiate alternatives,…

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The UK property market (especially London) is regularly cited in the press as having overheated, with the disparity between income growth and prices growing exponentially. Following the financial crisis prices have pushed higher with double digit year-on-year growth in certain regions. Inflows of hot money from Russia, China (HK), Ukraine and peripheral European countries have led the growth in prime locations. Buy to let investments provide a relatively stable yield alongside the expectatio…

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The Peoples Bank of China, made an unscheduled announcement to cut the reserve requirement ratio (RRR) by 50bps to 19.5%. The announcement follows a wave of central banks cuts in January, in an attempt to fuel growth. The PBoC cut reduces the amount of cash banks are required to hold in reserve, in an attempt to stimulate the economy, or at least keep the economy stable. Concerns from analysts that the Chinese growth levels fuelled by credit were unsustainable have been noted continuou…

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