Morning Call

The Markit/CIPS UK Manufacturing PMI for April released at 9:30am beat analysts expectations with a print of 57.3 for April vs 55.8 March. The manufacturing index rose to a 5 month high, registering one of the best readings over the last 3 years. This is a significant boost to the UK government, as the economic recovery begins to really take hold, though this puts further pressure on the Bank of England. Carney reiterated that increasing interest rates would happen when the slac…

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The Federal Open Market Committee (FOMC) will release their policy update at 19:00 (BST) this evening. It is expected that Chair Janet Yellen will announce that they will taper the amount of monthly asset purchases by a further $10 billion. The asset purchases are split between Treasuries and Mortgage Backed Securities (MBS). Since the tapering begun under previous Chairman Bernanke, the FOMC has voted unanimously each month to reduce the purchases by $10bn; any deviation from this is…

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The Office for National Statistics (ONS) has released its first estimate for UK growth for the last 3 months at 0.8% slightly below analysts’ expectations of 0.9% for the quarter. The UK economy has grown by 3.1% over the last year, the ONS says. That's the strongest year-on-year change in GDP since the Q4 of 2007, after the near-collapse of Northern Rock.Though the figure is "disappointing” compared to expectations the key point to remember is that is shows the economy…

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The Office for National Statistics (ONS) released their March statistics for UK retail sales. The volume of sales edged up by 0.1% compared to February, a marginal improvement though the year-on-year figures were significantly higher, up 4.2% compared with March 2013. This difference has in part been attributed to the freezing cold weather that was experienced last year, which hampered sales. The headline for the release is that that the Non-Food stores saw the highest YoY increase (+9…

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The Bank of England released the minutes of the Monetary Policy Committee meeting for the 9th April this morning. The MPC voted unanimously (9-0) to leave interest rates at the record low level of 0.50% and the level of asset purchases unchanged at £375bn. Following the release in the FX markets sterling has been choppy as some would have hoped that a member of the MPC might have voted for a raise in rates. Cable is trading at a 5 year high with traders betting on the economic gr…

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The Office for National Statistics released the ILO Unemployment rate for the 3-months to February, which dropped to 6.9% from the previous reading of 7.1%. Employment was 239,000 higher than for September to November 2013 and 691,000 higher than a year earlier (ONS). The release shows a significant improvement in the unemployment rate, and poses a headache for the Bank of England. Mark Carney detailed under his forward guidance that the threshold for increasing interest rates would be the u…

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The Office for National Statistics released inflation data for March this morning, showing that the Consumer Price Index (CPI) had fallen since February; 1.7% to 1.6%. The may contributors to this fall were from the costs of transport and food, with a small impact from clothing and household goods. The full ONS CPI release for March The Retail Price Index (RPI) grew by 2.5% in the year ending Mach 2014, down from 2.7% in February. The macro release should be a positive for…

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The Bank of England has left interest rates at the record low of 0.50% to help stimulate the economy, following the financial crisis. There has been significant coverage in the media over the concerns of a new bubble emerging in property prices, specifically in London. The UK economy is beginning to fire on all cylinders (though unevenly) the focus is on the timing of the Bank of England’s raising of interest rates. The latest release from the Royal Institute of Chartered Surveyo…

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The UK economy is growing, and recently releases of macros data have beaten economists’ expectations: According the Office for National Statistics (ONS), UK industrial output has surged significantly above economists’ expectations; production increased 0.9% in February, compared to January with expectations of a +0.3% increase. The better than expected data, gave sterling a bid in FX markets, surging to above 1.6700 to trade at session highs. The British Chamber…

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The new chairman of the Federal Reserve Janet Yellen continued where Ben Bernake left off. On Wednesday evening the it was announced that the Federal Reserve would taper their monthly asset purchases by $10bn in April, as they had in recent months, easing the US economy from the stimulus as growth begins to gain pace. As expected interest rates were left unchanged at the record low of 0.25%, but hinted that rates could rise in 2015, which would be about 6 months after it is has finished its…

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The release on Wednesday morning from the Office for National Statistics (ONS) showed that the number of people in employment has continued to increase. The 3-month unemployment rate for November 2013-January 2014 was 7.2%, just above the Bank of England Forward Guidance 7% threshold announced in August 2013. The full ONS Labour Market Statistics release for March 2014…

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The Bank of England Monetary Policy Committee minutes from the meeting held on the 5th and 6th of March show that the members voted unanimously to leave interest rates and asset purchases unchanged. Current base rate: 0.50% Asset purchases (QE): £375bn The report highlights the appreciation of Sterling due to safehaven flows due to the escalation of tensions in Ukraine/Russia. The MPC mentioned that Sterling could continue to strengthen if UK growth remains favourabl…

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The central bank of the UK, has announced two new deputy governors, Ben Broadbent and the first female Nemat Shafik, who was previously with the International Monetary Fund. There is a third deputy governor role that is yet to be announced. Spencer Dale and Paul Fisher will lose their votes on the Monetary Policy Committee; however it is unlikely the change will have an effect as to when interest rates will be raised. The full press release from the Bank of England can be found h…

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The UK housing market is regularly covered in the UK press, but there is a significant regional disparity. There has been considerable concern from analysts and the media that the sustained growth in UK house prices, primarily in London, are creating a property bubble. The governments flagship Help-top-buy scheme, providing loan guarantees requiring only a 5% deposit have been criticised for being reckless, and potentially fuelling a UK subprime. However the latest release from the RIC…

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