Consolidated base but momentum dwindling?
It’s been another week where political dramas have dominated the headlines, whether it was Trump’s revolving doors for his senior staff in the White House, Germany’s car builder summit to save the diesel engine or never ending Brexit positioning. However, for the global investment community, a raft of data releases made the week far more substantial.
Trump cracking down on China or North Korea?
In the press this week, the rumblings of a ‘trade war’ between the US and China have been whirring up. President Donald Trump is expected to order trade representative Robert Lighthizer to conduct a formal investigation into “unfair” Chinese trade practices, including alleged intellectual property theft.
UK interest rates – when might they rise?
This week, the Bank of England (BoE) held its Monetary Policy Committee meeting (MPC) that decides the central bank’s base (interest) rate and released its July Inflation Report. The previous meeting in June had held a surprise, with the committee voting 5-3 against a rate hike, leading to speculation that the UK may actually be closer to a first rate rise this decade than generally anticipated. The end outcome of this month’s meeting was once again a ‘no rise’ vote, but also a reduced impression that rates would rise in the near term. This time, only 2 members voted for a rise, resulting in a 6-2 MPC vote against a rise. This had been widely expected, after one of the members who had voted for a rise last time had left the MPC on one of its regular membership rotation schedules.
FCI’s and monetary policy
Over the past weeks, there have been various articles in financial papers suggesting that markets were underestimating the speed at which the monetary policy cycle would turn from ‘easy’ to tightening. They pointed out that it was likely that there would be a far sooner than anticipated return to more normal/tighter monetary conditions – such as the US Fed’s stated intention to start reducing their stock of QE (quantitative easing) holdings, probably from September 2017.
Technology, turning points and Happy Birthday Apple iPhone
When historians analyse eras or epochs, they often cite key moments or turning points, when the status quo faced disruption. History then bifurcates into periods of ‘before’ and ‘after’.
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