Wednesday, February 10, 2010
UK home loans interest rates fall to new lows
The cost of tracker mortgage rates fell to a record low during January as competition continued to return to the mortgage market, figures from the Bank of England show.
The average interest rate charged on one of the deals dropped to 3.63pc from 3.92pc during the month, the lowest level since Bank of England records on the product began in 1997.
There was also an improvement in the cost of fixed rate mortgages, with two-year loans falling to an average of 3.97pc, a level last seen in July 2003, while the cost of a five-year deal dropped by 0.12pc to 5.55pc.
Competition in the mortgage market has been steadily improving since the beginning of the year, with more than 300 new mortgage products launched during January, while a flurry of lenders also cut their rates on existing deals.
The average interest rate charged on one of the deals dropped to 3.63pc from 3.92pc during the month, the lowest level since Bank of England records on the product began in 1997.
There was also an improvement in the cost of fixed rate mortgages, with two-year loans falling to an average of 3.97pc, a level last seen in July 2003, while the cost of a five-year deal dropped by 0.12pc to 5.55pc.
Competition in the mortgage market has been steadily improving since the beginning of the year, with more than 300 new mortgage products launched during January, while a flurry of lenders also cut their rates on existing deals.
Significantly, there has been a big improvement in the number of deals available to people with only small deposits, with a 26pc jump in mortgage availability for people borrowing up to 90pc of their home's value during January.
Commentators said the move showed lenders were feeling increasingly optimistic about the housing market, following 12 months of rising house prices, while they were also more confident about pricing in risk.
This trend has continued into February, with Nationwide announcing that it was reducing the minimum deposit people needed to put down to qualify for its best rates from 40pc to 30pc on nearly half of its mortgage products.
Bank of England figures also showed that personal loan rates eased slightly during January.
The average interest charged on a £5,000 loan fell to 13.32pc after reaching a record high of 13.38pc in November, while the cost of a £10,000 loan dropped to an average of 10.91pc, down from 11.08pc the previous month.
But the cost of credit card borrowing continued to rise, increasing to 16.4pc in January, its highest level since July 2006.
Commentators said the move showed lenders were feeling increasingly optimistic about the housing market, following 12 months of rising house prices, while they were also more confident about pricing in risk.
This trend has continued into February, with Nationwide announcing that it was reducing the minimum deposit people needed to put down to qualify for its best rates from 40pc to 30pc on nearly half of its mortgage products.
Bank of England figures also showed that personal loan rates eased slightly during January.
The average interest charged on a £5,000 loan fell to 13.32pc after reaching a record high of 13.38pc in November, while the cost of a £10,000 loan dropped to an average of 10.91pc, down from 11.08pc the previous month.
But the cost of credit card borrowing continued to rise, increasing to 16.4pc in January, its highest level since July 2006.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Labels: Bank of England, falling interest rates, interest rates, UK loans rates
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Friday, January 08, 2010
Bank of England freeze on UK interest rates continues
UK interest rates have been left at 0.5% following the Bank of England's latest meeting.
The cost of borrowing has been at a record low since March 2009 and economists do not expect the central bank to raise rates in the near term.
The Bank's Monetary Policy Committee (MPC) also maintained the quantitative easing (QE), or asset buying, programme at £200bn.
The UK is thought to have exited recession in the last quarter of 2009.
The MPC said it expected its QE programme to take another month to complete and that the scale of the programme would be kept under review.
Manufacturers said they supported the Bank's decision. The recovery is now underway, but its strength remains in doubt.
The cost of borrowing has been at a record low since March 2009 and economists do not expect the central bank to raise rates in the near term.
The Bank's Monetary Policy Committee (MPC) also maintained the quantitative easing (QE), or asset buying, programme at £200bn.
The UK is thought to have exited recession in the last quarter of 2009.
The MPC said it expected its QE programme to take another month to complete and that the scale of the programme would be kept under review.
Manufacturers said they supported the Bank's decision. The recovery is now underway, but its strength remains in doubt.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Labels: Aussie loans rates, Bank of England, credit crunch, home loans-rates-UK, interest rates, Loan calculator, MPC, Quantitative Easing, uk recession
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Thursday, January 07, 2010
UK loans interest rates could rise as early as March
UK loans interest rates could start to rise in two months' time, according to one economist.
Signs of an economic recovery and sharply rising inflation could force the Bank of England's monetary policy committee (MPC) to consider raising rates early this year, an analysis by Henderson New Star indicated.
The company's "MPC-ometer" – a statistical tool for forecasting interest rate decisions based on the latest economic and financial indicators – predicts that the MPC will shift to a "tightening bias" in early 2010.
"With preliminary fourth-quarter GDP [economic growth] figures released in late January likely to confirm a recovery, and inflation rising sharply, the model suggests that Bank Rate could be increased as early as March," Henderson said.
The MPC-ometer has a good record of predicting the Bank's decisions on interest rates. It has correctly signalled the month and direction of 12 out of 13 rate movements over the past two and a half years, two more than the mean economists' forecast from the monthly Reuters poll, the fund manager said.
Simon Ward, Henderson's chief economist, said: "Monetary policy must remain loose to support the recovery but the current emergency level of Bank Rate is no longer warranted and poses a risk to achieving the inflation target.
"The MPC is likely to prepare markets for policy reversal in the February Inflation Report and follow through with a rate increase in the spring, unless economic or financial indicators take a sudden turn for the worse."
Mr Ward first warned in September last year that rates could start to rise sharply in early 2010. He said then: "Given the historically low starting level [of interest rates], rises in Bank Rate, when they begin, could be larger than in the initial stages of prior cycles."
Signs of an economic recovery and sharply rising inflation could force the Bank of England's monetary policy committee (MPC) to consider raising rates early this year, an analysis by Henderson New Star indicated.
The company's "MPC-ometer" – a statistical tool for forecasting interest rate decisions based on the latest economic and financial indicators – predicts that the MPC will shift to a "tightening bias" in early 2010.
"With preliminary fourth-quarter GDP [economic growth] figures released in late January likely to confirm a recovery, and inflation rising sharply, the model suggests that Bank Rate could be increased as early as March," Henderson said.
The MPC-ometer has a good record of predicting the Bank's decisions on interest rates. It has correctly signalled the month and direction of 12 out of 13 rate movements over the past two and a half years, two more than the mean economists' forecast from the monthly Reuters poll, the fund manager said.
Simon Ward, Henderson's chief economist, said: "Monetary policy must remain loose to support the recovery but the current emergency level of Bank Rate is no longer warranted and poses a risk to achieving the inflation target.
"The MPC is likely to prepare markets for policy reversal in the February Inflation Report and follow through with a rate increase in the spring, unless economic or financial indicators take a sudden turn for the worse."
Mr Ward first warned in September last year that rates could start to rise sharply in early 2010. He said then: "Given the historically low starting level [of interest rates], rises in Bank Rate, when they begin, could be larger than in the initial stages of prior cycles."
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Labels: Bank of England, home loans-rates-UK, interest rates, Loan calculator
# posted by Dr Search- Principal Consultant at the Search Clinic @ 6:11 PM 0 comments
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Tuesday, December 29, 2009
Personal loans rationed as costs rise
UK borrowers looking to take out a personal loan will find it increasingly difficult as banks tighten their lending criteria and increase the cost of personal loans to limit the best deals to existing customers.
The average rate of a best buy £5,000 loan has risen by 1.54 per cent since the beginning of the year to 10.78 per cent despite interest rates remaining at just 0.5 per cent.
Research also revealed that eight out of nine high street lenders have restricted their loan offerings to existing customers, typically those who hold a current account .
While the number of people searching for a loan using its services has increased by 20 per cent since the end of last year, figures from the British Bankers’ Association showed that borrowing through personal loans has dropped by 28 per cent over the same period.
The average rate of a best buy £5,000 loan has risen by 1.54 per cent since the beginning of the year to 10.78 per cent despite interest rates remaining at just 0.5 per cent.
Research also revealed that eight out of nine high street lenders have restricted their loan offerings to existing customers, typically those who hold a current account .
While the number of people searching for a loan using its services has increased by 20 per cent since the end of last year, figures from the British Bankers’ Association showed that borrowing through personal loans has dropped by 28 per cent over the same period.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Labels: interest rates, Loan calculator, loans rates, UK loans rates
# posted by Dr Search- Principal Consultant at the Search Clinic @ 11:54 AM 0 comments
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Thursday, December 24, 2009
Cost of UK loans close to Italy debt interest rates
The cost of borrowing for the British citizens has surged to within a whisker of Italian levels as global debt markets issue their damning verdict on the labour Government’s spending plans.
The yield on 10 year gilts rocketed yesterday to 3.97pc, 46 basis points higher than costs on French bonds.
Britain and France were neck and neck as recently as last month, before Labour’s pre-Budget report raised deep concerns among Chinese, Arab, and Russian investors about the credibility of British state.
But what has caught market attention is the narrowing gap with Italian bonds, once mocked as the symbol of an ill-governed nation in thrall to the Dolce Vita.
Yields on 10-Italian treasuries have been hovering just above 4pc despite the eurozone’s Greek crisis, dropping as low as 3.98pc earlier this week.
Britain is vulnerable to a “gilts strike” because foreign investors own £217bn of UK debt, or 28pc of the total. These are footloose funds and likely to sell large holdings if Britain loses its AAA rating.
They have other tempting places to park their money, such as Turkey, Brazil, or India, where demography is healthy and growth prospects are better. Chile has already undercut British debt yields on some maturities.
Italy has its own problems, of course. Public debt was much higher before the crisis began. The IMF expects it to reach 120pc of GDP next year. However, this debt is mostly owned by high-saving Italians, who are less fickle than foreign funds.
For Italy, this may just be the calm before the storm. Markets assume that Germany will ultimately bail out Greece if necessary, preventing contagion to the rest of the Club Med bloc.
This is a questionable judgement. Volker Wissing, head of the finance committee of the German Bundestag, said it must be made explicit that “Germany will not take responsibility for Greek debts”.
The yield on 10 year gilts rocketed yesterday to 3.97pc, 46 basis points higher than costs on French bonds.
Britain and France were neck and neck as recently as last month, before Labour’s pre-Budget report raised deep concerns among Chinese, Arab, and Russian investors about the credibility of British state.
But what has caught market attention is the narrowing gap with Italian bonds, once mocked as the symbol of an ill-governed nation in thrall to the Dolce Vita.
Yields on 10-Italian treasuries have been hovering just above 4pc despite the eurozone’s Greek crisis, dropping as low as 3.98pc earlier this week.
Britain is vulnerable to a “gilts strike” because foreign investors own £217bn of UK debt, or 28pc of the total. These are footloose funds and likely to sell large holdings if Britain loses its AAA rating.
They have other tempting places to park their money, such as Turkey, Brazil, or India, where demography is healthy and growth prospects are better. Chile has already undercut British debt yields on some maturities.
Italy has its own problems, of course. Public debt was much higher before the crisis began. The IMF expects it to reach 120pc of GDP next year. However, this debt is mostly owned by high-saving Italians, who are less fickle than foreign funds.
For Italy, this may just be the calm before the storm. Markets assume that Germany will ultimately bail out Greece if necessary, preventing contagion to the rest of the Club Med bloc.
This is a questionable judgement. Volker Wissing, head of the finance committee of the German Bundestag, said it must be made explicit that “Germany will not take responsibility for Greek debts”.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Labels: consolidate debt loans, credit crunch, interest rates, labour liars, refinancing rates, sub prime loans, UK loans rates
# posted by Dr Search- Principal Consultant at the Search Clinic @ 11:51 AM 0 comments
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Wednesday, December 16, 2009
US to keep loans interest rates low
The Amercian US Federal Reserve repeated its promise to keep interest rates low for an extended period as economic activity remains weak.
Releasing the minutes from its December meeting, the central bank committee left the lending rate at zero to 0.25 per cent. There has been no change to the rate since last December.
The Fed gave a more cheerful assessment of the economy than it had after its meeting last month.
It said that the environment had “continued to pick up”, with an improvement in the labour market, moderate expansion in household spending and signs of improvement in the housing sector.
But the Fed said that with considerable slack remaining in manufacturing capacity, there was little danger of inflation.
Also, although improving, unemployment is still high at 10 per cent and credit continues to be difficult to obtain, the bank said.
There have been concerns that the Fed’s ultra-low rates policy would fuel inflation.
However, Ben Bernanke, the Fed Chairman, considers low rates to be vital to sustaining the economic recovery.
The US Dollar Index, which tracks the greenback against other main currencies, rose to 76.983 points after the Fed’s more optimistic outlook for the economy, up from 76.815 pre-announcement.
Releasing the minutes from its December meeting, the central bank committee left the lending rate at zero to 0.25 per cent. There has been no change to the rate since last December.
The Fed gave a more cheerful assessment of the economy than it had after its meeting last month.
It said that the environment had “continued to pick up”, with an improvement in the labour market, moderate expansion in household spending and signs of improvement in the housing sector.
But the Fed said that with considerable slack remaining in manufacturing capacity, there was little danger of inflation.
Also, although improving, unemployment is still high at 10 per cent and credit continues to be difficult to obtain, the bank said.
There have been concerns that the Fed’s ultra-low rates policy would fuel inflation.
However, Ben Bernanke, the Fed Chairman, considers low rates to be vital to sustaining the economic recovery.
The US Dollar Index, which tracks the greenback against other main currencies, rose to 76.983 points after the Fed’s more optimistic outlook for the economy, up from 76.815 pre-announcement.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Labels: Bernanke, FED, home loans, interest rates, loans rates
# posted by Dr Search- Principal Consultant at the Search Clinic @ 5:33 PM 0 comments
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Monday, December 14, 2009
UK banks increase cost of personal loans
UK banks are being accused of profiteering as they increase the amount they charge for personal loans and limit the best deals to existing customers.
The cost of a best buy £5,000 loan has risen 1.54 per cent since the beginning of the year to 10.78 per cent despite interest rates being at a historic low of just 0.5 per cent.
The rise means customers will spend £162 a month over three years repaying the loan, or an extra £120 over the lifetime of the deal compared to last January.
The cost of a best buy £5,000 loan has risen 1.54 per cent since the beginning of the year to 10.78 per cent despite interest rates being at a historic low of just 0.5 per cent.
The rise means customers will spend £162 a month over three years repaying the loan, or an extra £120 over the lifetime of the deal compared to last January.
The Bank of England disclosed last week that non-mortgage or credit card based lending fell by £0.7 billion in October, but experts said the decline was expected given the restricted choice of loans available.
A spokesman for the British Bankers’ Association, said: “We have also seen the average rates for personal loans increase across the board so consumers who are lucky enough to be accepted for a loan have to pay more too.”
“The UK economy has changed considerably since the credit crunch began and it is still changing. Lenders price their loans according to the economic factors of the time, and although there is still aggressive competition for customers, there are also harsh economic realities they have to deal with.
“They still have to fund their loans using a mix of wholesale money and customers’ deposits, and neither of these options is open to them at anything like the Bank of England’s base rate.”
“The UK economy has changed considerably since the credit crunch began and it is still changing. Lenders price their loans according to the economic factors of the time, and although there is still aggressive competition for customers, there are also harsh economic realities they have to deal with.
“They still have to fund their loans using a mix of wholesale money and customers’ deposits, and neither of these options is open to them at anything like the Bank of England’s base rate.”
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Labels: Bank of England, home loans, interest rates, Loan calculator, loans
# posted by Dr Search- Principal Consultant at the Search Clinic @ 1:51 PM 0 comments
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Thursday, November 26, 2009
Overdraft charges- consumers back Supreme Court ruling
The majority of UK consumers are pleased that the banks won a surprise court victory in their battle over unauthorised overdraft charges, it has emerged.
The Supreme Court ruled yesterday that the charges are not subject to regulation by the Office of Fair Trading (OFT) under unfair contract rules.
The ruling means that millions of people who have paid the charges will not be entitled to refunds, but it also lifts the threat against free banking.
Industry commentators had warned that if the banks lost the lucrative income stream from the charges they would look for other ways to recoup it, such as through imposing a flat monthly fee on current account customers or charging for every transaction.
A survey of 3,500 people following the court's decision found that 51pc of people thought the current charging system was fair, saying they objected to subsidising people who could not manage their money. A further 5pc said someone had to pay for free banking in Britain.
But 20pc of people said they thought the charges were too high and penalised the poorest households most, while 24pc thought people were being ripped off by the banks.
Customers who go into unauthorised overdraft or breach their agreed limit can be charged as much as £35 or more for a single bounced payment. Campaigners claim the actual cost to the banks could be as little as £2.50. The charges generate around £2.6bn of revenue a year for banks, and are used to subsidise free banking for other consumers.
The High Court test case was bought by the OFT and seven banks and a building society after thousands of consumers started to reclaim the charges. More than 1m claims were put on hold until the outcome of the case was known.
Consumer group Which? said people were now unlikely to get the charges refunded and it warned them against using claims handling firms who say they could still get them their money back.
The Supreme Court ruled yesterday that the charges are not subject to regulation by the Office of Fair Trading (OFT) under unfair contract rules.
The ruling means that millions of people who have paid the charges will not be entitled to refunds, but it also lifts the threat against free banking.
Industry commentators had warned that if the banks lost the lucrative income stream from the charges they would look for other ways to recoup it, such as through imposing a flat monthly fee on current account customers or charging for every transaction.
A survey of 3,500 people following the court's decision found that 51pc of people thought the current charging system was fair, saying they objected to subsidising people who could not manage their money. A further 5pc said someone had to pay for free banking in Britain.
But 20pc of people said they thought the charges were too high and penalised the poorest households most, while 24pc thought people were being ripped off by the banks.
Customers who go into unauthorised overdraft or breach their agreed limit can be charged as much as £35 or more for a single bounced payment. Campaigners claim the actual cost to the banks could be as little as £2.50. The charges generate around £2.6bn of revenue a year for banks, and are used to subsidise free banking for other consumers.
The High Court test case was bought by the OFT and seven banks and a building society after thousands of consumers started to reclaim the charges. More than 1m claims were put on hold until the outcome of the case was known.
Consumer group Which? said people were now unlikely to get the charges refunded and it warned them against using claims handling firms who say they could still get them their money back.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Labels: home loans, interest rates, loans rates, UK loans rates
# posted by Dr Search- Principal Consultant at the Search Clinic @ 5:43 PM 0 comments
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Friday, November 06, 2009
Bank of England prints another £25 billion
The Bank of England's Monetary Policy Committee voted as expected to leave interest rates unchanged at 0.5%.
However Quantitative Easing was expanded by £25 billion to take the programme to £200 billion of money created to buy debt.
This was less than many expected and in the accompanying statement the Bank of England were slightly more upbeat on a pick up in economic activity and the market has taken the perception that we will now see at the very least a pause in the programme.
This changes the perception towards exit strategies and to a more hawkish tone…this has given sterling a boost even in the light of the decision to expand QE. The market is looking forward and the prospect of the next quarter showing the UK economy returning to growth and the halting of further QE.
The markets however remain very fickle and this sentiment could change very quickly.
Yesterday UK manufacturing rose 1.7% above expectations and Industrial Production climbed- again supportive of the sentiment that the worst is behind us.
Yesterday UK manufacturing rose 1.7% above expectations and Industrial Production climbed- again supportive of the sentiment that the worst is behind us.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Labels: Bank of England, interest rates, Quantitative Easing, UK loans rates
# posted by Dr Search- Principal Consultant at the Search Clinic @ 12:41 PM 0 comments
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Wednesday, November 04, 2009
US loans interest rates left unchanged
The Federal Reserve Board has kept US interest rates on hold at between 0% and 0.25%, as had been widely expected.
Despite the US economy growing 3.5% in July to September - its first expansion since June 2008 - rates were left unchanged to further aid the recovery.
The Fed reiterated its view that rates would need to stay at the historic low for an "extended period".
While economic activity had "continued to pick up", it said high unemployment remained a concern.
The most recent official jobless rate totalled 9.8% in September, a 26-year high.
Analysts have also cautioned that the economic expansion between July and September was greatly helped by President Obama's $787bn (£480bn) stimulus package, with some fearing that growth will slow markedly when this impetus comes to an end.
One of the most successful parts of the stimulus spending was the $3bn "cash for clunkers" car scrappage scheme, which gave people who traded in old cars $3,500 towards the cost of a new vehicle.
This initiative operated in July and August, giving US car sales a major boost in both months. Car sales subsequently fell sharply in September after the scheme had concluded.
US interest rates were cut to the current level of between 0% and 0.25% in December last year, where they have remained ever since.
Despite the US economy growing 3.5% in July to September - its first expansion since June 2008 - rates were left unchanged to further aid the recovery.
The Fed reiterated its view that rates would need to stay at the historic low for an "extended period".
While economic activity had "continued to pick up", it said high unemployment remained a concern.
The most recent official jobless rate totalled 9.8% in September, a 26-year high.
Analysts have also cautioned that the economic expansion between July and September was greatly helped by President Obama's $787bn (£480bn) stimulus package, with some fearing that growth will slow markedly when this impetus comes to an end.
One of the most successful parts of the stimulus spending was the $3bn "cash for clunkers" car scrappage scheme, which gave people who traded in old cars $3,500 towards the cost of a new vehicle.
This initiative operated in July and August, giving US car sales a major boost in both months. Car sales subsequently fell sharply in September after the scheme had concluded.
US interest rates were cut to the current level of between 0% and 0.25% in December last year, where they have remained ever since.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Labels: home loans, interest rates, loans, US loans rates, US mortgage rates
# posted by Dr Search- Principal Consultant at the Search Clinic @ 12:54 PM 0 comments
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Thursday, October 15, 2009
Buying a London home needs £93,000 wage
First time buyers in London must earn £93,000 a year to afford an average home in the city, a report has claimed.
The research by the National Housing Federation, which represents 1,200 housing associations, puts the average house price in London at £362,000.
A single buyer would require the near-six-figure income to get a 90% home loan at 3.5 times their salary.
The average wage in London is £26,000, while overcrowding rates are 2.5 times the national rate, the report said.
The Housing Federation's Belinda Porich said: "Even by London standards, these are astronomical prices and many people - especially young, first time buyers - can only dream of owning a home.
The report claims 353,000 families are currently on social housing waiting lists, while more families became homeless last year than new homes were built.
Nearly 7% of houses in London are overcrowded, the authors added.
The research by the National Housing Federation, which represents 1,200 housing associations, puts the average house price in London at £362,000.
A single buyer would require the near-six-figure income to get a 90% home loan at 3.5 times their salary.
The average wage in London is £26,000, while overcrowding rates are 2.5 times the national rate, the report said.
The Housing Federation's Belinda Porich said: "Even by London standards, these are astronomical prices and many people - especially young, first time buyers - can only dream of owning a home.
The report claims 353,000 families are currently on social housing waiting lists, while more families became homeless last year than new homes were built.
Nearly 7% of houses in London are overcrowded, the authors added.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Labels: home loans, inflation, interest rates, mortgage calculator, UK loans rates
# posted by Dr Search- Principal Consultant at the Search Clinic @ 9:14 AM 0 comments
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Wednesday, October 14, 2009
UK banks are ripping us off
It's getting cheaper for banks to borrow money, but not for the likes of you and me.
Last week, the British Bankers Association - a trade body for banks, funnily enough - published a factsheet called Your Mortgage and the Markets explaining why, although it may seem like banks are profiting hugely by pricing their mortgages much higher than they need to, actually they're not.
It is the second time lenders have been forced to defind how they price their mortgages, after a similar publication from a second trade body, the Council of Mortgage Lenders, a couple of months ago.
I'm not surprised that they feel they have to explain themselves.
Cast your mind back a year or so ago to when Bank Base Rate first started falling to its current record low. Lenders would pull their entire range of trackers before a Base Rate decision, only to release a new, slightly more expensive range, a few days later - when it was actually cheaper for them to borrow money from the Bank of England!
The explanation? Banks don't just borrow funds from the Bank of England. They borrow from each other. And actually, nowadays, the banks were quick to explain, it is the LIBOR rate (the rate at which banks lend to each other) that is the crucial factor in determining the interest rates of loans and mortgages. And as that wasn't moving, tracker rates wouldn't.
Now of course LIBOR has fallen as well, so that it is barely any higher than the Base Rate, and surprise surprise, the banks have changed their tune.
The banks argue that the Bank Base Rate, LIBOR and swap rates (traditionally the mechanism by which lenders secured cash for fixed rate mortgages) are no longer indicators - the rates offered to savers are apparently a better guide.
This is because, they say, with the wholesale and securitisation markets effectively closed, banks are forced to rely on raising money through savings accounts, which is a pretty expensive method at the best of times. Add in the fact that all banks are in the same boat, competing for the same savings business, and you can see why costs might start to creep up.
But that doesn't mean you can simply dismiss things like LIBOR and swap rates as indicators of where mortgage pricing should be. They may not be the be all and end all, but they remain very important factors.
And they also shine the light on just how big a cut the banks are taking at the moment, a fact brilliantly outlined by some research from lovemoney.com partner, Moneyfacts.
Let's start with the average two year mortgage - forever and a day the favourite mortgage of Brits. In September 2007, for a 75% loan-to-value mortgage, the average rate was about 0.18 percentage points above swap rates. A year later, that margin had increased to 0.7 percentage points.
Today, it stands at an extraordinary 2.79 percentage points above the swap rates.
The position is even worse with high loan-to-value mortgages. With a 90% mortgage, in September 2007, that margin stood at just 0.02 percentage points. By last September it had reached 1.34 percentage points. And last month it stood at a whopping 4.25 percentage points above swap rates. So they're typically making more than 212 times as much profit on the funds they borrow using swap rates, than they were just two years ago!
No wonder the banks want us to ignore swap rates!
Last week, the British Bankers Association - a trade body for banks, funnily enough - published a factsheet called Your Mortgage and the Markets explaining why, although it may seem like banks are profiting hugely by pricing their mortgages much higher than they need to, actually they're not.
It is the second time lenders have been forced to defind how they price their mortgages, after a similar publication from a second trade body, the Council of Mortgage Lenders, a couple of months ago.
I'm not surprised that they feel they have to explain themselves.
Cast your mind back a year or so ago to when Bank Base Rate first started falling to its current record low. Lenders would pull their entire range of trackers before a Base Rate decision, only to release a new, slightly more expensive range, a few days later - when it was actually cheaper for them to borrow money from the Bank of England!
The explanation? Banks don't just borrow funds from the Bank of England. They borrow from each other. And actually, nowadays, the banks were quick to explain, it is the LIBOR rate (the rate at which banks lend to each other) that is the crucial factor in determining the interest rates of loans and mortgages. And as that wasn't moving, tracker rates wouldn't.
Now of course LIBOR has fallen as well, so that it is barely any higher than the Base Rate, and surprise surprise, the banks have changed their tune.
The banks argue that the Bank Base Rate, LIBOR and swap rates (traditionally the mechanism by which lenders secured cash for fixed rate mortgages) are no longer indicators - the rates offered to savers are apparently a better guide.
This is because, they say, with the wholesale and securitisation markets effectively closed, banks are forced to rely on raising money through savings accounts, which is a pretty expensive method at the best of times. Add in the fact that all banks are in the same boat, competing for the same savings business, and you can see why costs might start to creep up.
But that doesn't mean you can simply dismiss things like LIBOR and swap rates as indicators of where mortgage pricing should be. They may not be the be all and end all, but they remain very important factors.
And they also shine the light on just how big a cut the banks are taking at the moment, a fact brilliantly outlined by some research from lovemoney.com partner, Moneyfacts.
Let's start with the average two year mortgage - forever and a day the favourite mortgage of Brits. In September 2007, for a 75% loan-to-value mortgage, the average rate was about 0.18 percentage points above swap rates. A year later, that margin had increased to 0.7 percentage points.
Today, it stands at an extraordinary 2.79 percentage points above the swap rates.
The position is even worse with high loan-to-value mortgages. With a 90% mortgage, in September 2007, that margin stood at just 0.02 percentage points. By last September it had reached 1.34 percentage points. And last month it stood at a whopping 4.25 percentage points above swap rates. So they're typically making more than 212 times as much profit on the funds they borrow using swap rates, than they were just two years ago!
No wonder the banks want us to ignore swap rates!
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Labels: Bank of England, credit crunch, interest rates, Loan calculator, UK loans rates, uk recession
# posted by Dr Search- Principal Consultant at the Search Clinic @ 9:36 AM 0 comments
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Monday, October 12, 2009
Loans rates to stay low until 2014
Loans interest rates will stay at rock bottom in the years to come as the labour Government tackles the wounded economy, a report says.
The cost of borrowing is to remain at its record low of 0.5pc until at least 2011 and remain below 2pc until 2014, according to a study by the Centre for Economics and Business Research (CEBR).
A weaker pound - slumping to just 1.40 US dollars and possibly falling below parity with the euro - is also expected.
The CEBR predicts the next government will have to engineer around £100 billion in tax rises and spending cuts to deal with the country's deficit.
Political parties are already vying to explain how they plan to address the dire public finances after next year's general election.
The report forecasts that should the Conservatives win power this will mean £20 billion in extra taxes with an £80 billion reduction in spending.
A future government will have to wrestle the budget deficit down to £50 billion by the 2014/15 financial year, a tough challenge as the CEBR also warns that the deficit will be £143 billion in that year without action.
The report also predicts the Bank of England will increase its quantitative easing (QE) programme - essentially printing money - by another £75 billion.
This month the Bank voted to not to increase its programme to boost the money supply from its current £175 billion.
But further QE is expected, not least because governor Mervyn King and two other committee members have already argued for a £75 billion boost to the scheme.
The cost of borrowing is to remain at its record low of 0.5pc until at least 2011 and remain below 2pc until 2014, according to a study by the Centre for Economics and Business Research (CEBR).
A weaker pound - slumping to just 1.40 US dollars and possibly falling below parity with the euro - is also expected.
The CEBR predicts the next government will have to engineer around £100 billion in tax rises and spending cuts to deal with the country's deficit.
Political parties are already vying to explain how they plan to address the dire public finances after next year's general election.
The report forecasts that should the Conservatives win power this will mean £20 billion in extra taxes with an £80 billion reduction in spending.
A future government will have to wrestle the budget deficit down to £50 billion by the 2014/15 financial year, a tough challenge as the CEBR also warns that the deficit will be £143 billion in that year without action.
The report also predicts the Bank of England will increase its quantitative easing (QE) programme - essentially printing money - by another £75 billion.
This month the Bank voted to not to increase its programme to boost the money supply from its current £175 billion.
But further QE is expected, not least because governor Mervyn King and two other committee members have already argued for a £75 billion boost to the scheme.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Labels: Bank of England, credit crunch, falling interest rates, interest rates, UK loans rates, uk recession
# posted by Dr Search- Principal Consultant at the Search Clinic @ 10:35 AM 0 comments
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Tuesday, September 29, 2009
UK savings rates hit all time low
UK savings rates have sunk to a new all time low, according to the Bank of England, even though mortgage rates have continued to creep upwards.
The figures come despite official data that suggests consumers want to save money more than at any time in the last six years, as they tighten their belts to cope with the recession.
Despite the all-time low savings rates that banks and building societies are offering, the so-called savings ratio has climbed to the highest level since 2003.
The figures come despite official data that suggests consumers want to save money more than at any time in the last six years, as they tighten their belts to cope with the recession.
Despite the all-time low savings rates that banks and building societies are offering, the so-called savings ratio has climbed to the highest level since 2003.
The ratio, which measures what proportion of their earnings Britons are putting aside, rose to 5.6 per cent in the second quarter of the year – the highest level since 2003, and well above the 1.7 per cent level of last year.
Prudent households, however, are being punished with wafer-thin savings rates, the Bank of England figures suggest.
The average bank instant access account, the most popular form of savings accounts, paid just 0.72 per cent in August, down from 0.74 per cent the month before and a fraction of the 3.1 per cent offered a year ago. It is the lowest rate the Bank of England has recorded since it started monitoring these rates in 1993.
Cash Individual Savings Account, a tax free savings vehicle, now offer a mere 0.41 per cent, slipping from 0.42 in July and a tenth of the level they offered a year ago.
Bank of England figures also indicate that while savers are failing to benefit, mortgage holders are also suffering.
Prudent households, however, are being punished with wafer-thin savings rates, the Bank of England figures suggest.
The average bank instant access account, the most popular form of savings accounts, paid just 0.72 per cent in August, down from 0.74 per cent the month before and a fraction of the 3.1 per cent offered a year ago. It is the lowest rate the Bank of England has recorded since it started monitoring these rates in 1993.
Cash Individual Savings Account, a tax free savings vehicle, now offer a mere 0.41 per cent, slipping from 0.42 in July and a tenth of the level they offered a year ago.
Bank of England figures also indicate that while savers are failing to benefit, mortgage holders are also suffering.
Despite some high-profile attractive deals that have been issued in recent weeks, during August the average two-year fixed rate mortgage edged up from 4.42 to 4.43 per cent. Five-year fixed rate home loans climbed from 5.68 per cent to 5.72 per cent.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Labels: Bank of England, falling interest rates, home loans, interest rates, loans rates, UK loans rates
# posted by Dr Search- Principal Consultant at the Search Clinic @ 2:07 PM 0 comments
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Monday, September 28, 2009
Bank of England defends Mervyn King over loans rates
Mervyn King is not trying to talk down the Pound, say Bank of England sources, who insist that the currency and loans markets have misinterpreted the governor’s comments.
Sterling dropped below €1.09 and $1.60 on Friday, its lowest for nearly six months and four months respectively.
Market traders attributed the weakness to a Bank bulletin last week which suggested that the Pound’s “sustainable” exchange rate had fallen. It was followed by an interview with King, in which he said the lower pound was “helpful” for the rebalancing of the economy.
Traders accused the Bank of trying to talk down the pound deliberately. It countered that the bulletin comment was an attempt to explain the fall in sterling that had already occurred since 2007, and was not a suggestion that it should fall further.
Sterling dropped below €1.09 and $1.60 on Friday, its lowest for nearly six months and four months respectively.
Market traders attributed the weakness to a Bank bulletin last week which suggested that the Pound’s “sustainable” exchange rate had fallen. It was followed by an interview with King, in which he said the lower pound was “helpful” for the rebalancing of the economy.
Traders accused the Bank of trying to talk down the pound deliberately. It countered that the bulletin comment was an attempt to explain the fall in sterling that had already occurred since 2007, and was not a suggestion that it should fall further.
Similarly, King’s comment was to a Newcastle newspaper that is running a campaign to boost local exports. The fall already recorded would be “helpful” in that effort, he said.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Labels: Bank of England, consolidate debt loans, falling interest rates, home loans, interest rates
# posted by Dr Search- Principal Consultant at the Search Clinic @ 12:36 PM 0 comments
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Thursday, September 24, 2009
Bank of England says UK recovery could prove a false dawn
The Bank of England warned yesterday that Britain’s tentative recovery could be a “false dawn”, despite issuing a relatively upbeat economic forecast and revealing that none of its policymakers saw the need to expand the asset purchase stimulus programme this month.
According to the minutes of the Bank’s rate-setting meeting this month, published yesterday, all nine members of its Monetary Policy Committee (MPC) voted to maintain Britain’s key interest rate at its record low of 0.5 per cent.
Giving an economic overview, the minutes said: “There had been a number of developments during the month with positive implications for the short term . . . But the lesson from previous financial crises was that they were not resolved quickly, and that there could be false dawns.
“The banking system still had to complete a process of balance sheet adjustment . . . High levels of public debt internationally and the persistence of global imbalances remained downside risks to the sustainability of the recovery.”
According to the minutes of the Bank’s rate-setting meeting this month, published yesterday, all nine members of its Monetary Policy Committee (MPC) voted to maintain Britain’s key interest rate at its record low of 0.5 per cent.
Giving an economic overview, the minutes said: “There had been a number of developments during the month with positive implications for the short term . . . But the lesson from previous financial crises was that they were not resolved quickly, and that there could be false dawns.
“The banking system still had to complete a process of balance sheet adjustment . . . High levels of public debt internationally and the persistence of global imbalances remained downside risks to the sustainability of the recovery.”
The minutes also showed the MPC voted unanimously to maintain the so-called quantitative easing (QE) programme — under which the Bank seeks to stimulate the economy by printing money and buying assets from banks — at £175 billion. This marked a strategic shift for Mervyn King, the Bank’s Governor, and David Miles, who had wanted to increase QE to a total of £200billion in August, but were overruled.
The minutes noted “the medium-term outlook had not changed markedly” since the new QE level was agreed last month”, adding that “in the absence of significant news about the medium term the case for adjusting the programme was now outweighed by the benefits of following through with the programme of asset purchases announced in August”.
Although Mr King and Mr Miles switched sides for this month’s QE vote, they still believe there could be a case for increasing the programme in the event that the fragile economic recovery falters. On Tuesday the Bank will host a seminar for about 50 of London’s leading economists to address queries over its efforts to pump cash into the economy -- a development that the MPC remains concerned about.
The minutes noted “the medium-term outlook had not changed markedly” since the new QE level was agreed last month”, adding that “in the absence of significant news about the medium term the case for adjusting the programme was now outweighed by the benefits of following through with the programme of asset purchases announced in August”.
Although Mr King and Mr Miles switched sides for this month’s QE vote, they still believe there could be a case for increasing the programme in the event that the fragile economic recovery falters. On Tuesday the Bank will host a seminar for about 50 of London’s leading economists to address queries over its efforts to pump cash into the economy -- a development that the MPC remains concerned about.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Labels: Bank of England, home loans, interest rates, MPC, Quantitative Easing
# posted by Dr Search- Principal Consultant at the Search Clinic @ 9:04 AM 0 comments
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Wednesday, September 23, 2009
UK loans rates may reach 2% next year
The Bank of England may start to raise interest rates next spring and could take the cost of borrowing to 2 per cent by the end of next year, according to the latest economic forecasts.
The Bank has held rates at a record low of 0.5 per cent to help businesses and consumers to contend with the recession, but the central bank will need room to act in the coming months if inflationary pressures become a worry, the employers’ organisation said. Ian McCafferty, the CBI’s chief economic adviser, said that he expected inflation to be volatile next year, renewing pressure on the Bank.
The CBI forecasts that the consumer prices index will rise by 2.4 per cent during the first quarter of next year. The Bank’s official target is to limit inflation to 2 per cent.
However, Mr McCafferty said that the CBI would welcome interest rate rises next year as a sign that normality was beginning to return to the economic cycle. “It is fairly clear to us that the Bank of England will be maintaining the very accommodative stance that it has had throughout the period. But the Bank will want to avoid problems it has faced in previous cycles, where it gets boxed in and finds it hard to act over monetary policy,” he said.
His comments came as the CBI upgraded its forecasts for Britain’s economic prospects, predicting that Britain would emerge from recession by the end of this month.
The CBI’s predictions of quarter-on-quarter growth in GDP of 0.3 per cent in the third quarter and 0.4 per cent in the fourth represent a sharp rise in confidence from the business group. At its previous economic forecast in June, it said that the economy would shrink by 0.1 per cent in the third quarter and stagnate with flat growth for the rest of the year.
The Bank has held rates at a record low of 0.5 per cent to help businesses and consumers to contend with the recession, but the central bank will need room to act in the coming months if inflationary pressures become a worry, the employers’ organisation said. Ian McCafferty, the CBI’s chief economic adviser, said that he expected inflation to be volatile next year, renewing pressure on the Bank.
The CBI forecasts that the consumer prices index will rise by 2.4 per cent during the first quarter of next year. The Bank’s official target is to limit inflation to 2 per cent.
However, Mr McCafferty said that the CBI would welcome interest rate rises next year as a sign that normality was beginning to return to the economic cycle. “It is fairly clear to us that the Bank of England will be maintaining the very accommodative stance that it has had throughout the period. But the Bank will want to avoid problems it has faced in previous cycles, where it gets boxed in and finds it hard to act over monetary policy,” he said.
His comments came as the CBI upgraded its forecasts for Britain’s economic prospects, predicting that Britain would emerge from recession by the end of this month.
The CBI’s predictions of quarter-on-quarter growth in GDP of 0.3 per cent in the third quarter and 0.4 per cent in the fourth represent a sharp rise in confidence from the business group. At its previous economic forecast in June, it said that the economy would shrink by 0.1 per cent in the third quarter and stagnate with flat growth for the rest of the year.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Labels: consolidate debt loans, home loans, interest rates, UK loans rates, uk recession
# posted by Dr Search- Principal Consultant at the Search Clinic @ 9:36 AM 0 comments
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Monday, September 14, 2009
House prices will take five years to return to peak
House prices will not return to the peak reached in autumn 2007 for at least another five years, according to Ernst & Young’s Item Club.
The influential group’s gloomy forecast contradicts the increasingly optimistic outlook of the Government and some commentators that the British economy has begun a sustained recovery.
The recent rise in property values is a “false dawn” that will not last beyond spring, Hetal Mehta, Item’s senior economic adviser, said. In a special report released today, Item predicts that homeowners are in for a drop in prices in next year’s first half and then two years of stagnation.
The recent rise in property values is a “false dawn” that will not last beyond spring, Hetal Mehta, Item’s senior economic adviser, said. In a special report released today, Item predicts that homeowners are in for a drop in prices in next year’s first half and then two years of stagnation.
Sustained recovery will start only in 2011 and take until at least 2014 to return prices to their 2007 high, Item says.
The housing market is sicklier than many think because several fundamental problems have not been solved. First-time buyers are continuing to find it very tough to get on the ladder, banks are reluctant to lend and many homeowners are trapped in negative equity and do not want to crystallise losses, Item said.
The housing market is sicklier than many think because several fundamental problems have not been solved. First-time buyers are continuing to find it very tough to get on the ladder, banks are reluctant to lend and many homeowners are trapped in negative equity and do not want to crystallise losses, Item said.
Rising unemployment — expected by Item to peak at 2.76 million, or 8.8 per cent next spring — will also hamper a strong rebound, it said. House prices have leapt in the past few months, partly because few properties have been put up for sale and well-off buyers with cash have snapped up those that have been listed for sale.
However, over the longer term, supply will freeze again, Item said, as cash buyers dried up and homeowners continued to be reluctant to sell while their property was worth less than it was a few years ago.
Would-be buyers would also be inhibited by a lack of attractive mortgage offers, Item believes. Although banks have promised to increase lending to mortgage customers, a greater priority is shrinking their balance sheets by reducing lending, it said. Mortgage availability was slightly up amid a plethora of funding packages created by the Government, but will stay very restricted, according to Item.
Would-be buyers would also be inhibited by a lack of attractive mortgage offers, Item believes. Although banks have promised to increase lending to mortgage customers, a greater priority is shrinking their balance sheets by reducing lending, it said. Mortgage availability was slightly up amid a plethora of funding packages created by the Government, but will stay very restricted, according to Item.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Labels: home loans, interest rates, mortgage calculator, unemployment
# posted by Dr Search- Principal Consultant at the Search Clinic @ 8:59 AM 0 comments
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Friday, September 11, 2009
UK loans interest rate kept at 0.5% by Bank of England
The Bank of England’s Monetary Policy Committee voted yesterday to hold interest rates at 0.5 per cent for the sixth month running.
The MPC also voted to make no change to the pace at which it is pumping cash into the economy through its quantitative easing (QE) programme — retaining the size of the programme at £175 billion.
It said that it expected the programme would take another two months to complete.
In its statement, the MPC said: “The Bank of England’s Monetary Policy Committee today voted to maintain the official Bank Rate paid on commercial bank reserves at 0.5 per cent.
“The Committee also voted to continue with its programme of asset purchases totalling £175 billion financed by the issuance of central bank reserves.
“The Committee expects the announced programme to take another two months to complete. The scale of the programme will be kept under review.”
The move had been widely anticipated by the markets, but sterling rose slightly against the dollar and the euro on foreign exchange markets immediately after the announcement, rising by 0.7 cents to $1.659 against the greenback.
The decision follows several indications that the economy may be returning to growth after five quarters of recession — including a recovery in manufacturing output, signs of a rally in the housing market and news that activity in the services sector is expanding again.
And it comes after the shock decision, at August’s policy meeting, to expand the Bank’s programme of asset purchases from £125 billion to £175 billion — although Mervyn King, the Bank Governor, and two other MPC members, David Miles and Tim Besley, had voted to expand the programme to £200 billion.
Details of yesterday’s vote will emerge with publication of minutes of today’s meeting on September 23.
The MPC also voted to make no change to the pace at which it is pumping cash into the economy through its quantitative easing (QE) programme — retaining the size of the programme at £175 billion.
It said that it expected the programme would take another two months to complete.
In its statement, the MPC said: “The Bank of England’s Monetary Policy Committee today voted to maintain the official Bank Rate paid on commercial bank reserves at 0.5 per cent.
“The Committee also voted to continue with its programme of asset purchases totalling £175 billion financed by the issuance of central bank reserves.
“The Committee expects the announced programme to take another two months to complete. The scale of the programme will be kept under review.”
The move had been widely anticipated by the markets, but sterling rose slightly against the dollar and the euro on foreign exchange markets immediately after the announcement, rising by 0.7 cents to $1.659 against the greenback.
The decision follows several indications that the economy may be returning to growth after five quarters of recession — including a recovery in manufacturing output, signs of a rally in the housing market and news that activity in the services sector is expanding again.
And it comes after the shock decision, at August’s policy meeting, to expand the Bank’s programme of asset purchases from £125 billion to £175 billion — although Mervyn King, the Bank Governor, and two other MPC members, David Miles and Tim Besley, had voted to expand the programme to £200 billion.
Details of yesterday’s vote will emerge with publication of minutes of today’s meeting on September 23.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Labels: Bank of England, interest rates, MPC, Quantitative Easing, UK loans rates, uk recession
# posted by Dr Search- Principal Consultant at the Search Clinic @ 9:13 AM 0 comments
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Thursday, September 10, 2009
Bank of England urged to punish high street lenders
The Bank of England should carry out its threat to penalise high street lenders by cutting the interest it pays on cash held by them in its reserve accounts, The Times monetary policy committee (MPC) recommends.
The plan was mooted last month by Mervyn King, the Bank Governor, as part of efforts to encourage lenders to inject more money into the financial system.
Four of the nine member panel of economic experts on The Times MPC thought that the Bank should press ahead with the plan.
Professor Charles Goodhart, of the London School of Economics, the most fervent backer of the scheme, said that the cash balances “piled up at the Bank of England” were “socially useless” and that the Bank should impose a negative interest rate on money held by each bank in excess of 2 per cent of their total assets.
HSBC, Royal Bank of Scotland, Barclays, Lloyds and Northern Rock held a total of £157 billion in central bank reserves at June 30, up from £90.6 billion at the end of 2008.
Sushil Wadhwani, a former external member of the Bank’s MPC, Rupert Pennant-Rea, a former Deputy Governor of the Bank of England, and Sir Steve Robson, former Second Permanent Secretary at the Treasury, also lent their backing to the plan.
Otherwise the panel was united in its call for interest rates to be kept unchanged at 0.5 per cent, where they have remained for five consecutive months, and for the Bank’s drive to jump-start the economy with huge injections of newly printed money to be halted for now with burgeoning signs that the recession is coming to an end.
The plan was mooted last month by Mervyn King, the Bank Governor, as part of efforts to encourage lenders to inject more money into the financial system.
Four of the nine member panel of economic experts on The Times MPC thought that the Bank should press ahead with the plan.
Professor Charles Goodhart, of the London School of Economics, the most fervent backer of the scheme, said that the cash balances “piled up at the Bank of England” were “socially useless” and that the Bank should impose a negative interest rate on money held by each bank in excess of 2 per cent of their total assets.
HSBC, Royal Bank of Scotland, Barclays, Lloyds and Northern Rock held a total of £157 billion in central bank reserves at June 30, up from £90.6 billion at the end of 2008.
Sushil Wadhwani, a former external member of the Bank’s MPC, Rupert Pennant-Rea, a former Deputy Governor of the Bank of England, and Sir Steve Robson, former Second Permanent Secretary at the Treasury, also lent their backing to the plan.
Otherwise the panel was united in its call for interest rates to be kept unchanged at 0.5 per cent, where they have remained for five consecutive months, and for the Bank’s drive to jump-start the economy with huge injections of newly printed money to be halted for now with burgeoning signs that the recession is coming to an end.
Many were surprised by the Bank’s decision last month to pump a fresh £50 billion into the economy to ensure that the recovery continued.
The decision to extend its programme of quantitative easing from £125 billion to £175 billion broke the ceiling set by the Chancellor of £150 billion.
The decision to extend its programme of quantitative easing from £125 billion to £175 billion broke the ceiling set by the Chancellor of £150 billion.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Labels: Bank of England, home loans, interest rates, Quantitative Easing, UK loans rates
# posted by Dr Search- Principal Consultant at the Search Clinic @ 8:43 AM 0 comments
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Tuesday, September 08, 2009
Gold rises above $1,000 an ounce
Gold prices on Tuesday hit a fresh six month high above $1,000 a troy ounce, as investors continued to worry about the re-emergence of inflation.
Traders said that the bulk of the buying came after a confluence of bullish chart signals triggered speculative flows into the precious metal.
In early morning trading in London, spot bullion traded as high as $1,005, up 1 per cent on the previous day. It is the third time that gold has moved above $1,000 since March 2008, when it hit a record high of $1,035. In New York, gold futures for delivery in December rose to $1,004 an ounce.
Gold has attracted investors since the collapse of Lehman Brothers last year as an insurance against the financial crisis, but also amid concern that the extraordinary steps taken by central banks to prop up the global economy could lead to higher inflation in 2010.
Hedge funds that made money last year by betting against the survival of Wall Street banks, including David Einhorn’s Greenlight Capital and hedge fund Paulson & Co, have bought gold this year as a way of betting against the ability of central banks to steer the world out of crisis without triggering inflation. Their strategies have drawn in more investors.
At the same time, retail investors have bought record amounts of bullion coins. The US Mint sold from January to August about 838,500 ounces of the popular American Eagle gold coin, up from 446,000 ounces in the same period of 2008.
The dollar’s recent slide against other currencies has helped underpin gold. Nevertheless, traders and analysts are doutbtful about the prospects of a substantial rally in the gold price beyond $1,000 an ounce because of lacklustre jewellery and industrial demand.
Jewellery demand for gold, traditionally the backbone of the bullion market, sank to a 5½-year low in the second quarter of 2009 due to global economic recession. High local prices in India, the world’s largest jewellery market, also weighed on demand, which fell 31 per cent to 88 tonnes in the second quarter, while demand in Turkey, another key market for gold jewellery, dropped 54 per cent to 19.2 tonnes.
Traders said that the bulk of the buying came after a confluence of bullish chart signals triggered speculative flows into the precious metal.
In early morning trading in London, spot bullion traded as high as $1,005, up 1 per cent on the previous day. It is the third time that gold has moved above $1,000 since March 2008, when it hit a record high of $1,035. In New York, gold futures for delivery in December rose to $1,004 an ounce.
Gold has attracted investors since the collapse of Lehman Brothers last year as an insurance against the financial crisis, but also amid concern that the extraordinary steps taken by central banks to prop up the global economy could lead to higher inflation in 2010.
Hedge funds that made money last year by betting against the survival of Wall Street banks, including David Einhorn’s Greenlight Capital and hedge fund Paulson & Co, have bought gold this year as a way of betting against the ability of central banks to steer the world out of crisis without triggering inflation. Their strategies have drawn in more investors.
At the same time, retail investors have bought record amounts of bullion coins. The US Mint sold from January to August about 838,500 ounces of the popular American Eagle gold coin, up from 446,000 ounces in the same period of 2008.
The dollar’s recent slide against other currencies has helped underpin gold. Nevertheless, traders and analysts are doutbtful about the prospects of a substantial rally in the gold price beyond $1,000 an ounce because of lacklustre jewellery and industrial demand.
Jewellery demand for gold, traditionally the backbone of the bullion market, sank to a 5½-year low in the second quarter of 2009 due to global economic recession. High local prices in India, the world’s largest jewellery market, also weighed on demand, which fell 31 per cent to 88 tonnes in the second quarter, while demand in Turkey, another key market for gold jewellery, dropped 54 per cent to 19.2 tonnes.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Labels: consolidate debt loans, falling interest rates, Gold, interest rates
# posted by Dr Search- Principal Consultant at the Search Clinic @ 8:48 AM 0 comments
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Thursday, July 09, 2009
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Being refused credit or having a bad credit rating is nothing to be ashamed of and we won't judge you either.
We may still be able to arrange an unsecured bad credit loan for you even if you've been turned down or refused credit many times.
A bad credit history is just that, history. So why not fill in our online form today for a free unsecured bad credit quotation and perhaps we can turn your bad credit history into a positive result.
We specialise in helping those previously refused by other companies and high street lenders. Finance for tenants, homeowners, and anybody with bad credit or credit difficulties such as CCJs, defaults or mortgage arrears.
We even arrange loans for the those who have difficulty in proving their income.
No matter what you need, experienced and friendly advisors will guide you every step of the way - so your loan application goes ahead quickly, easily and completely hassle free.
Personal finance- If you’re looking for personal finance talk to a adviser today to discuss your financing requirements. We work with a range of providers to ensure we can offer you good terms and interest rates on personal finance.
Your personal finance may be for any purpose, from a new vehicler to an overseas trip, whatever you want the additional money for we will try and help. Once your application has been processed, an in-principle decision can be made very quickly. When your application has been approved your money will be made available as soon as possible, and you are free to spend it as you wish.
Please click here now to APPLY NOW online here now
Life is difficult enough- escpecially during these crunch times. It is our intention to try and save you time, worry and money by finding you the best value, unbiased financial services. Deep Throat's adage during the Watergate crisis to the Washington Post was to follow the finance to uncover the truth. This is a maxim we endeavour to copy without any fuss or hassle as we try to offer the best value impartial finances for you. As long as you are employed and you are over 18, you can apply. Please contact us today for a free no obligation quote!
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Labels: consolidate debt loans, home loans, interest rates, Loan calculator, loans
# posted by Dr Search- Principal Consultant at the Search Clinic @ 7:55 AM 0 comments
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Monday, July 06, 2009
Loan Payment Calculator- refinancing for self employed and people with bad credit histories
Loan Payment Calculator- You may want your loan for major home improvement work, a holiday, to pay school or university fees, to consolidate debts or to provide financial support for your children.
Whatever you need to loan the extra money for we will be happy to listen.
Your loan can be for any purpose and once we have received your completed homeowner loan form your loan application will be processed quickly to ensure your secured homeowner loan is granted as soon as possible. Once your loan is granted you are free to spend your money on anything you wish.
Borrow £5,000 to £1,000,000
Borrow over 3 to 25 years
Simple, fast and straight forward
Free yourself from unwanted debts
For UK loans seekers looking for a fast online LOAN PAYMENT CALCULATOR APPLY NOW please click here now
For UK mortgage holders looking for a fast online mortgage calculator APPLY NOW please click here now
Being refused credit or having a bad credit rating is nothing to be ashamed of and we won't judge you either.
We may still be able to arrange an unsecured bad credit loan for you even if you've been turned down or refused credit many times.
A bad credit history is just that, history. So why not fill in our online form today for a free unsecured bad credit loan quotation and perhaps we can turn your bad credit history into a positive result.
We specialise in helping those previously refused by other companies and high street lenders. Finance for tenants, homeowners, and anybody with bad credit or credit difficulties such as CCJs, defaults or mortgage arrears.
We even arrange loans for the self-employed and those who have difficulty in proving their income.
No matter what you need, experienced and friendly advisors will guide you every step of the way - so your loan application goes ahead quickly, easily and completely hassle free.
What is an unsecured bad credit home loan?
An unsecured bad credit loan is for people who have had problems in the past, and now have a less than perfect credit rating. An unsecured bad credit loan does not require you to use your property as a guarantee or security for the loan either. As it is unsecured, the loan offers a little more flexibility to the borrower that does not wish to put their home at risk.
Who are the loans for?
Loans are in the first instance, best suited to those with a bad credit history who do not wish to secure the loan against their property. In the second instance, an unsecured bad credit loan is often the only option for people or tenants who suffer with a bad credit history and have no property to secure the loan against.
Who can apply for a loan?
The simple answer is anybody can apply for an unsecured bad credit loan, however in reality before an application can be processed your age and employment status are taken into consideration.
You may need to arrange finance for a new car, a well-deserved holiday, home improvements, to pay school or university fees, or to pay off credit cards or an overdraft.
Your finance can be for any purpose and your application will be processed quickly to ensure your monies are granted as soon as possible. Once your loans are granted you are free to spend the money on anything you wish.
As long as you are employed and you are over 18, you can apply. Please contact us today for a free no obligation quote.
Our lenders provide some of the most competitive finances in the UK. So if you’re looking for a help and you’re a UK resident why not ask for a quote?
At Wise Money we work with a number of different financial services providers. As a result we find that we are able to provide competitive rates and terms for a wide range of different personal circumstances.
You can choose between a secured or an unsecured credit and it can be for any purpose. All we ask is that you can meet the monthly repayments and that you’re a UK resident.
You can expect a prompt and efficient service. An in-principle decision will be made as soon as possible and once your application has been fully processed your money is made available to you as quickly as possible which you are then free to spend as you wish.
Please click here now to APPLY NOW online here now
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Labels: home loans, home-loans-rates-UK, interest rates, Loan calculator
# posted by Dr Search- Principal Consultant at the Search Clinic @ 12:54 PM 0 comments
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Monday, June 29, 2009
Commercial Finance- an easy solution to your funding requirements.
Commercial Finance through Wise Money. Whilst the following represent a flavour of what our commercial finance lenders can help you with, these are merely guidelines and they are still very flexible. Shouldyour overall position be sufficiently strong then we may be able to step outside these guidelines.
Please remember business loans do not have stringent underwriting criteria. All cases vary and one lender may look at one risk differently from another. If you are in any doubt please contact us today on 0845 467 0127 quoting Wise Money)
Or for UK loans seekers looking for a fast online loan calculator COMMERCIAL FINANCE please click here now
Not sure what to do? Simply complete the form for a free no obligation quote and you can talk through your alternatives with our trained advisors.
Or for UK loans seekers looking for a fast online loan calculator COMMERCIAL FINANCE please click here now
Not sure what to do? Simply complete the form for a free no obligation quote and you can talk through your alternatives with our trained advisors.
If you are looking for a mortgage, even if you have a poor credit history, come to us first to see what we can do. Your poor credit history does not exclude you from getting a mortgage or remortgage.
Even if your poor credit rating has meant you’ve had special terms imposed on remortgage quotes in the past, we have access to a number of suppliers of poor credit remortgages and have been able to help many customers with a poor credit rating to arrange a suitable remortgage.
If features such as no early repayment penalties, transfer flexibility, or payment holidays are important to you these will be factored in to our search. If these features are not important to you, our team of advisors will base the search on finding you the most suitable mortgage available to suit your particular circumstances.
If you’ve had problems finding a regular mortgage because you can’t prove your income please talk to our lenders about a self certification mortgage. We work with a number of suppliers who are happy to consider self certification mortgages. If this sounds like the type of mortgage you need talk to one of our advisers today to see what we can do foryou.
Once we have all the details, your self certification mortgage will be processed as soon as possible to ensure your funds are available so you can complete your house purchase without delay.
For UK loans seekers looking for a fast online loans calculator APPLY NOW please click here now
Your loans can be for any purpose and your application will be processed quickly to ensure your monies are granted as soon as possible. Once your loans are granted you are free to spend the money on anything you wish.
As long as you are employed and you are over 18, you can apply. Please contact us today for a free no obligation quote.
Our lenders provide some of the most competitive loans in the UK. So if you’re looking for a help and you’re a UK resident why not ask for a quote?
At Wise Money we work with a number of different financial services providers. As a result we find that we are able to provide competitive rates and terms for a wide range of different personal circumstances.
You can choose between a secured or an unsecured credit and it can be for any purpose. All we ask is that you can meet the monthly repayments and that you’re a UK resident.
You can expect a prompt and efficient service. An in-principle decision will be made as soon as possible and once yourapplication has been fully processed your money is made available to you as quickly as possible which you are then free to spend as you wish.
Please click here now to APPLY NOW online here now
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Labels: consolidate debt loans, interest rates, Loan calculator, loans, UK loans rates
# posted by Dr Search- Principal Consultant at the Search Clinic @ 8:37 AM 0 comments
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Wednesday, June 10, 2009
Banks repay $68bn debt loans
Interest rates may return to more normal levels after the bombed out banking sector promised to repay some of their loans from taxpayers.
Ten bailed out US banks have been cleared to pay back a combined $68 billion (£41 billion) of government aid in a move greeted by investors as a sign that stability is returning to the sector.
The Treasury said that it had told ten institutions that they had raised enough new capital to enable them to repay loans made under the Troubled Asset Relief Program (Tarp).
Several banks, including JP Morgan Chase, Capital One Financial, Morgan Stanley and BB&T Corporation, immediately announced that they would take up the offer.
JPMorgan said that it would repay in full a $25 billion investment along with dividends. Jamie Dimon, the group’s chairman and chief executive, said: “Paying back Tarp at this time is the right thing for JPMorgan Chase, and it’s the right thing for our country.”
The others said to have been cleared were Goldman Sachs, Bank of New York Mellon, Northern Trust, State Street, American Express and US Bancorp. Many of the banks had winced at the restrictions accompanying the bailout funds, such as limits on executive pay.
The Treasury said in a statement that the repayments “follow a period in which many banks have successfully raised equity capital from private investors”. Timothy Geithner, the Treasury Secretary, said: “These repayments are an encouraging sign of financial repair but we still have work to do.”
US shares were flat on the news as investors fear that an oversupply of government debt could push interest rates higher. The Dow Jones industrial average inched up by 1.43 points or 0.02 per cent to 8,763.06.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Ten bailed out US banks have been cleared to pay back a combined $68 billion (£41 billion) of government aid in a move greeted by investors as a sign that stability is returning to the sector.
The Treasury said that it had told ten institutions that they had raised enough new capital to enable them to repay loans made under the Troubled Asset Relief Program (Tarp).
Several banks, including JP Morgan Chase, Capital One Financial, Morgan Stanley and BB&T Corporation, immediately announced that they would take up the offer.
JPMorgan said that it would repay in full a $25 billion investment along with dividends. Jamie Dimon, the group’s chairman and chief executive, said: “Paying back Tarp at this time is the right thing for JPMorgan Chase, and it’s the right thing for our country.”
The others said to have been cleared were Goldman Sachs, Bank of New York Mellon, Northern Trust, State Street, American Express and US Bancorp. Many of the banks had winced at the restrictions accompanying the bailout funds, such as limits on executive pay.
The Treasury said in a statement that the repayments “follow a period in which many banks have successfully raised equity capital from private investors”. Timothy Geithner, the Treasury Secretary, said: “These repayments are an encouraging sign of financial repair but we still have work to do.”
US shares were flat on the news as investors fear that an oversupply of government debt could push interest rates higher. The Dow Jones industrial average inched up by 1.43 points or 0.02 per cent to 8,763.06.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Labels: consolidate debt loans, interest rates, sub prime loans
# posted by Dr Search- Principal Consultant at the Search Clinic @ 4:10 PM 0 comments
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Monday, June 08, 2009
Ireland credit rating cut for second time
Ireland had its credit rating cut for the second time in three months and was warned that it could fall further following concerns about the "continued fragility" of its banking sector and doubts about the Government's bailout plan.
Standard & Poor's (S&P) downgraded the long-term rating of the former "Celtic Tiger" by a further notch to AA, from AA+.
The Republic was stripped of its top AAA ranking in March when S&P concluded that the meltdown in the country's finances would take far longer to repair than the Government envisaged.
Today S&P warned: "The rating could be lowered again if asset quality in the Irish banking system deteriorates at a faster pace than we expect ... and if, as a result of its suport for the sector or due to an even more pronounced downturn in economic growth, the Government's fiscal performance weakens further than we currently assume."
The fresh downgrade was triggered, S&P said, in part by poor recent figures from Anglo Irish Bank.
In May, in its first results since nationalisation, Anglo reported losses of €4 billion (£3.4 billion) for the six months to March 21, compared with a €667 million profit in the same period last year while provisions for bad loans were €4.1 billion, compared with just €33 million last year.
The losses, S&P said, were at the upper end of its own expectations and highlighted the "continued fragility of the Irish banking sector".
S&P is also sceptical about the power of Ireland's new National Asset Management Agency (NAMA) to revive the fortunes of its banking sector. The agency is a "bad bank" which will take on the toxic debts of financial institutions.
The ratings agency considers NAMA's ability to meet its financial objectives is "uncertain because of the risk that cashflows from its assets could fall below its funding costs".
Overall, S&P concluded, the cost to the Government of bailiing out the banking sector will be "significantly higher than what we had expected when we last lowered the rating in March ... and consequently that the net general government debt burden will also be significantly higher over the medium term".
Ireland's economy has been savaged by the global economic downturn as well as a slumping property market, soaring unemployment and tumbling retail sales. In September, Ireland became the first eurozone country to fall into an official recession after it declared two successive quarters of negative economic growth.
Prior to the current downturn, the Irish economy had not experienced a recession since 1983 and enjoyed double-digit growth in the 1990s.
In a bid to salvage the situation the Irish Government has pumped €7 billion into its two top lenders, Allied Irish Bank and Bank of Ireland.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Standard & Poor's (S&P) downgraded the long-term rating of the former "Celtic Tiger" by a further notch to AA, from AA+.
The Republic was stripped of its top AAA ranking in March when S&P concluded that the meltdown in the country's finances would take far longer to repair than the Government envisaged.
Today S&P warned: "The rating could be lowered again if asset quality in the Irish banking system deteriorates at a faster pace than we expect ... and if, as a result of its suport for the sector or due to an even more pronounced downturn in economic growth, the Government's fiscal performance weakens further than we currently assume."
The fresh downgrade was triggered, S&P said, in part by poor recent figures from Anglo Irish Bank.
In May, in its first results since nationalisation, Anglo reported losses of €4 billion (£3.4 billion) for the six months to March 21, compared with a €667 million profit in the same period last year while provisions for bad loans were €4.1 billion, compared with just €33 million last year.
The losses, S&P said, were at the upper end of its own expectations and highlighted the "continued fragility of the Irish banking sector".
S&P is also sceptical about the power of Ireland's new National Asset Management Agency (NAMA) to revive the fortunes of its banking sector. The agency is a "bad bank" which will take on the toxic debts of financial institutions.
The ratings agency considers NAMA's ability to meet its financial objectives is "uncertain because of the risk that cashflows from its assets could fall below its funding costs".
Overall, S&P concluded, the cost to the Government of bailiing out the banking sector will be "significantly higher than what we had expected when we last lowered the rating in March ... and consequently that the net general government debt burden will also be significantly higher over the medium term".
Ireland's economy has been savaged by the global economic downturn as well as a slumping property market, soaring unemployment and tumbling retail sales. In September, Ireland became the first eurozone country to fall into an official recession after it declared two successive quarters of negative economic growth.
Prior to the current downturn, the Irish economy had not experienced a recession since 1983 and enjoyed double-digit growth in the 1990s.
In a bid to salvage the situation the Irish Government has pumped €7 billion into its two top lenders, Allied Irish Bank and Bank of Ireland.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Labels: consolidate debt loans, credit crunch, ECB, euro, interest rates, recession
# posted by Dr Search- Principal Consultant at the Search Clinic @ 7:40 AM 0 comments
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Thursday, June 04, 2009
Bank of England interest loans rates kept on hold
The Bank of England pegged interest rates today for a third month in a row and stayed its hand over any other changes in its recession fighting strategy as it paused for breath in its battle to combat Britain’s economic slump.
The Bank opted to hold interest rates once more at their 315-year low of 0.5 per cent as it weighs the impact of its expanded £125 billion drive to jump-start the economy with injections of newly created money.
The decision follows a frantic, eight-month scramble by the Bank’s Monetary Policy Committee (MPC) to shore up the economy since last October, when the global economic crisis escalated significantly.
Between last October and March, the Bank drastically cut interest rates and embarked on its aggressive moves to “print money” under a strategy of quantitative easing (QE), involving huge purchases of government and company bonds to pump extra cash through the economy.
This month’s noon “no change” verdict from the MPC follows its surprise move last month to boost the amount it plans to spend on asset purchases under its QE scheme by an extra £50 billion, and was widely predicted in the City.
It comes against a backdrop of continued uncertainty over the outlook, but growing optimism that, although the recession is continuing, the worst of the economy’s slump may be over.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
The Bank opted to hold interest rates once more at their 315-year low of 0.5 per cent as it weighs the impact of its expanded £125 billion drive to jump-start the economy with injections of newly created money.
The decision follows a frantic, eight-month scramble by the Bank’s Monetary Policy Committee (MPC) to shore up the economy since last October, when the global economic crisis escalated significantly.
Between last October and March, the Bank drastically cut interest rates and embarked on its aggressive moves to “print money” under a strategy of quantitative easing (QE), involving huge purchases of government and company bonds to pump extra cash through the economy.
This month’s noon “no change” verdict from the MPC follows its surprise move last month to boost the amount it plans to spend on asset purchases under its QE scheme by an extra £50 billion, and was widely predicted in the City.
It comes against a backdrop of continued uncertainty over the outlook, but growing optimism that, although the recession is continuing, the worst of the economy’s slump may be over.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Labels: Bank of England, interest rates, MPC, UK loans rates
# posted by Dr Search- Principal Consultant at the Search Clinic @ 3:03 PM 0 comments
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Monday, May 11, 2009
Loan Calculator says enjoy the rally while it lasts
Our delicious spring rally is nearing the limits.
The 40pc rise on global bourses since March assumes that central banks have conjured away the debt overhang by slashing rates to zero and printing money. Nothing of the sort has occurred. Two thirds of the world economy will be in deflation by July.
Bear market rallies can be explosive. Japan had four violent spikes during its Lost Decade (33pc, 55pc, 44pc, and 79pc). Wall Street had seven during the Great Depression, lasting 40 days on average. The spring of 1931 was a corker.
James Montier at Société Générale said that even hard-bitten bears are starting to throw in the towel, suspecting that we really are on the cusp of new boom. That is a tell-tale sign.
"Prolonged suckers' rallies tend to be especially vicious as they force everyone back into the market before cruelly dashing them on the rocks of despair yet again," he said. Genuine bottoms tend to be "quiet affairs", carved slowly in a fog of investor gloom.
Another sign of fakery – apart from the implausible 'V' shape – is the "dash for trash" in this rally. The mostly heavily shorted stocks are up 70pc: the least shorted are up 21pc. Stocks with bad fundamentals in SocGen's model (Anheuser-Busch, Cairn Energy, Ericsson) are up 60pc: the best are up 30pc.
Teun Draaisma, Morgan Stanley's stock guru, expects another shake-out. "We think the bear market rally will end sooner rather than later. None of our signposts of the next bull market has flashed green yet. We're not convinced the banking system has been fully fixed," he said
Mr Draaisma said US housing busts typically last nearly about 42 months. We are just 26 months into this one. The overhang of unsold properties on the US market is still near a record 11 months. He expects the new bull market to kick off later this year – perhaps in October – anticipating real recovery in 2010.
Keep an eye on the upward creep in yields on the 10-year US Treasury, the benchmark price of world credit. This alone threatens to short-circuit the rally. The yield reached 3.3pc last week, up over 1pc since January and above the level in March when the US Federal Reserve first launched its buying blitz to pull rates down. Bond vigilantes are taunting the Bank of England in much the same way, driving the 10-year gilt yield to 3.73pc.
The happy view is that this tightening of the bond markets is proof of recovery fever, but there is a dark side.
Governments need to raise $6 trillion (£4 trillion) this year to fund bail-outs and deficits, led by this abject isle with needs of 13.8pc of GDP (EU figures). China fired a warning shot last week, saying the West risks setting off "inflation for the whole world" by printing money. It hinted at a bond crisis.
Yes, the glass is half full. China's PMI optimism gauge has jumped back above the recession line. The global PMI has been rising for seven months. But this usually happens after a crash as companies rebuild battered inventories for a quarter or two.
Note that container volumes in Shanghai fell 17pc in January, 22pc in February, and 9pc in March. Rail freight volumes in the US were down 32pc in April on a year earlier.
The Economic Cycle Research Institute (ECRI) says the US recession will be over by summer, insisting that its leading indicators have never been wrong – except once, in the Great Depression. Quite.
This is like drinking hemlock. The US is gradually slipping further towards outright deflation, just as Japan did," he said. As companies retrench en masse they risk tipping the whole economy into Irving Fisher's "debt deflation trap.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
The 40pc rise on global bourses since March assumes that central banks have conjured away the debt overhang by slashing rates to zero and printing money. Nothing of the sort has occurred. Two thirds of the world economy will be in deflation by July.
Bear market rallies can be explosive. Japan had four violent spikes during its Lost Decade (33pc, 55pc, 44pc, and 79pc). Wall Street had seven during the Great Depression, lasting 40 days on average. The spring of 1931 was a corker.
James Montier at Société Générale said that even hard-bitten bears are starting to throw in the towel, suspecting that we really are on the cusp of new boom. That is a tell-tale sign.
"Prolonged suckers' rallies tend to be especially vicious as they force everyone back into the market before cruelly dashing them on the rocks of despair yet again," he said. Genuine bottoms tend to be "quiet affairs", carved slowly in a fog of investor gloom.
Another sign of fakery – apart from the implausible 'V' shape – is the "dash for trash" in this rally. The mostly heavily shorted stocks are up 70pc: the least shorted are up 21pc. Stocks with bad fundamentals in SocGen's model (Anheuser-Busch, Cairn Energy, Ericsson) are up 60pc: the best are up 30pc.
Teun Draaisma, Morgan Stanley's stock guru, expects another shake-out. "We think the bear market rally will end sooner rather than later. None of our signposts of the next bull market has flashed green yet. We're not convinced the banking system has been fully fixed," he said
Mr Draaisma said US housing busts typically last nearly about 42 months. We are just 26 months into this one. The overhang of unsold properties on the US market is still near a record 11 months. He expects the new bull market to kick off later this year – perhaps in October – anticipating real recovery in 2010.
Keep an eye on the upward creep in yields on the 10-year US Treasury, the benchmark price of world credit. This alone threatens to short-circuit the rally. The yield reached 3.3pc last week, up over 1pc since January and above the level in March when the US Federal Reserve first launched its buying blitz to pull rates down. Bond vigilantes are taunting the Bank of England in much the same way, driving the 10-year gilt yield to 3.73pc.
The happy view is that this tightening of the bond markets is proof of recovery fever, but there is a dark side.
Governments need to raise $6 trillion (£4 trillion) this year to fund bail-outs and deficits, led by this abject isle with needs of 13.8pc of GDP (EU figures). China fired a warning shot last week, saying the West risks setting off "inflation for the whole world" by printing money. It hinted at a bond crisis.
Yes, the glass is half full. China's PMI optimism gauge has jumped back above the recession line. The global PMI has been rising for seven months. But this usually happens after a crash as companies rebuild battered inventories for a quarter or two.
Note that container volumes in Shanghai fell 17pc in January, 22pc in February, and 9pc in March. Rail freight volumes in the US were down 32pc in April on a year earlier.
The Economic Cycle Research Institute (ECRI) says the US recession will be over by summer, insisting that its leading indicators have never been wrong – except once, in the Great Depression. Quite.
This is like drinking hemlock. The US is gradually slipping further towards outright deflation, just as Japan did," he said. As companies retrench en masse they risk tipping the whole economy into Irving Fisher's "debt deflation trap.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Labels: Bank of England, credit crunch, interest rates, Loan calculator, recession
# posted by Dr Search- Principal Consultant at the Search Clinic @ 1:12 PM 0 comments
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Friday, May 08, 2009
European Central Bank falls into line and embraces quantitative easing
Rearguard action by Germans to stave off 'undesirable option' dismissed by central bank's governing council as ECB cuts loans rates to 1%.
The European Central Bank is now following the policy first adopted by the Bank of England and America's Federal Reserve
The European Central Bank has cut interest rates a quarter point to a record low of 1pc and embraced quantitative easing (QE) for the first time, catching markets off guard with plans to buy €60bn (£53.5bn) of covered bonds.
The hotly disputed move to purchase assets brings the ECB into line with the central banks of the US, Britain, Japan, among others, that have begun "printing" money to stave off debt deflation.
This is likely to morph into fully-fledged quantitative easing. It's how the Fed began last October when it started purchasing commercial paper.
The step-change in policy follows an open clash within the ECB's governing council over its handling of Europe's worst slump since World War Two, pitting national governors from southern Europe and Ireland against the ECB's German-led hawks.
Bundesbank chief Axel Weber has fought a rearguard battle to head off QE, calling it an "undesirable option" that risked inflation later.
The majority also overruled his insistence on a 1pc "floor" for interest rates. Jean-Claude Trichet, the ECB's president, said the bank had not ruled out further cuts, "depending on future circumstances".
The refusal to accept Frankfurt's lead is a turning-point for ECB, which inherited its authority a decade ago from the Bundesbank. The upsets touches on a raw nerve in Germany where critics have always suspected that EMU would turn "soft". It may set off a political backlash.
Mr Trichet said covered bonds were picked because they have been hit hard by the crisis, but refused to rule out further assets later. The exact details are to be agreed at the ECB's June meeting.
Covered bonds or "Pfandbriefe" form the AAA backbone of Europe's mortgage markets. "They are a very safe asset, so this is the least controversial market," said Mr Callow.
The ECB also extended its liquidity scheme from 6 to 12 months and opened its window to the European Investment Bank, giving it a new crisis role.
David Marsh, author of The Euro - The Politics of the New Global Currency, said the ECB is loath to follow Anglo-Saxon banks in purchasing government bonds because this would give most help to big debtors such as Greece and Italy. "They don't want to be seen as bail-out merchants by acting as a bond purchaser of last resort for hard-pressed nations," he said.
The ECB has been widely criticised for its slow response over recent months, although it has quietly let its overnight deposit rate fall to 0.25pc. "The ECB needs to get ahead of this like the Bank of England or we'll face a Japanese scenario for the financial system," said Marco Annunziata, economist at Unicredito.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
The European Central Bank is now following the policy first adopted by the Bank of England and America's Federal Reserve
The European Central Bank has cut interest rates a quarter point to a record low of 1pc and embraced quantitative easing (QE) for the first time, catching markets off guard with plans to buy €60bn (£53.5bn) of covered bonds.
The hotly disputed move to purchase assets brings the ECB into line with the central banks of the US, Britain, Japan, among others, that have begun "printing" money to stave off debt deflation.
This is likely to morph into fully-fledged quantitative easing. It's how the Fed began last October when it started purchasing commercial paper.
The step-change in policy follows an open clash within the ECB's governing council over its handling of Europe's worst slump since World War Two, pitting national governors from southern Europe and Ireland against the ECB's German-led hawks.
Bundesbank chief Axel Weber has fought a rearguard battle to head off QE, calling it an "undesirable option" that risked inflation later.
The majority also overruled his insistence on a 1pc "floor" for interest rates. Jean-Claude Trichet, the ECB's president, said the bank had not ruled out further cuts, "depending on future circumstances".
The refusal to accept Frankfurt's lead is a turning-point for ECB, which inherited its authority a decade ago from the Bundesbank. The upsets touches on a raw nerve in Germany where critics have always suspected that EMU would turn "soft". It may set off a political backlash.
Mr Trichet said covered bonds were picked because they have been hit hard by the crisis, but refused to rule out further assets later. The exact details are to be agreed at the ECB's June meeting.
Covered bonds or "Pfandbriefe" form the AAA backbone of Europe's mortgage markets. "They are a very safe asset, so this is the least controversial market," said Mr Callow.
The ECB also extended its liquidity scheme from 6 to 12 months and opened its window to the European Investment Bank, giving it a new crisis role.
David Marsh, author of The Euro - The Politics of the New Global Currency, said the ECB is loath to follow Anglo-Saxon banks in purchasing government bonds because this would give most help to big debtors such as Greece and Italy. "They don't want to be seen as bail-out merchants by acting as a bond purchaser of last resort for hard-pressed nations," he said.
The ECB has been widely criticised for its slow response over recent months, although it has quietly let its overnight deposit rate fall to 0.25pc. "The ECB needs to get ahead of this like the Bank of England or we'll face a Japanese scenario for the financial system," said Marco Annunziata, economist at Unicredito.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Labels: Bank of England, ECB, falling interest rates, FED, interest rates, Quantitative Easing
# posted by Dr Search- Principal Consultant at the Search Clinic @ 8:57 AM 0 comments
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Thursday, May 07, 2009
US stress tests of banks a focal point for loan calculator
The results of the US banks stress testing is expected tomorrow after the markets in New York close- this is to be followed by a press conference from the Banks involved on Friday at which one would assume, they will argue their opposition to the findings.
Rumours and articles abound this morning concerning Bank of America with estimates that the Bank will be ‘asked' to get hold of $34 billion of fresh capital following the stress testing. This is about 3 times the original expectation and raises concerns over the total amount that might need to be raised by the other 9 major banks involved.
Equity markets were subdued with a small drop in the DOW recorded. The original stated purpose of the stress tests was to increase confidence in the US banking system, but the market feels like the end result has been almost exactly the opposite.
The markets have already received indications from the ECB president of a rate cut and the possibility of other measures- however with the reserve bank of Australia holding interest rates at 3% could this lead the ECB into a change in sentiment to hold rates?
The Norges Bank meet today and are expected to continue their rate cutting regime with a reduction by 50 basis points down to 1.50% anticipated.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Rumours and articles abound this morning concerning Bank of America with estimates that the Bank will be ‘asked' to get hold of $34 billion of fresh capital following the stress testing. This is about 3 times the original expectation and raises concerns over the total amount that might need to be raised by the other 9 major banks involved.
Equity markets were subdued with a small drop in the DOW recorded. The original stated purpose of the stress tests was to increase confidence in the US banking system, but the market feels like the end result has been almost exactly the opposite.
The markets have already received indications from the ECB president of a rate cut and the possibility of other measures- however with the reserve bank of Australia holding interest rates at 3% could this lead the ECB into a change in sentiment to hold rates?
The Norges Bank meet today and are expected to continue their rate cutting regime with a reduction by 50 basis points down to 1.50% anticipated.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Labels: credit crunch, falling interest rates, interest rates, Loan calculator, sub prime loans, US loans rates
# posted by Dr Search- Principal Consultant at the Search Clinic @ 9:28 AM 0 comments
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Wednesday, May 06, 2009
Loan Calculator radar set on Thursday's ECB rate decision
Last month the European Central Bank (ECB) surprised the markets by only cutting interest rates by 25 basis points to 1.25%- a record low but when compared against the UK interest rates of 0.5% and against the US of 0-0.25% then comparatively still high in the current global climate.
The market wanted to see more aggressive action amid rising unemployment and shrinking growth and all eyes will turn to the next ECB rate decision on Thursday. It is expected that another 25 basis point cut to 1% will materialize and the ECB may engage in additional "non conventional" measures- basically some form of Quantitative Easing to help the economy.
The European Union’s economic affairs commissioner recently declared that the European economy was in the "midst of its deepest and most widespread recession in the post-war era" and the euro zone will contract by 4% this year- this is more than twice than forecast in January.
In addition ECB president Jean- Claude Trichet is struggling to keep the ECB’s governing council united with the 22 members split in opinion on how far interest rates should be cut and whether the ECB should buy financial assets from the banks- so much is the wrangling that a vow of silence has been imposed on officials!
The German finance minister Peer Steinbruck has also noted concern that "competitive imbalances have built up within the euro area, increasing the exposure of some member states to the financial turmoil". There is also a worry of other countries losing their competitiveness within the eurozone- in particular Italy and Greece.
Stateside, the Fed plans to deliver results of stress tests on US banks to executives today that may show about 10 firms need additional capital to weather a deeper recession. An obvious way for banks to fill their capital requirements is via conversion of preference shares to common shares.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
The market wanted to see more aggressive action amid rising unemployment and shrinking growth and all eyes will turn to the next ECB rate decision on Thursday. It is expected that another 25 basis point cut to 1% will materialize and the ECB may engage in additional "non conventional" measures- basically some form of Quantitative Easing to help the economy.
The European Union’s economic affairs commissioner recently declared that the European economy was in the "midst of its deepest and most widespread recession in the post-war era" and the euro zone will contract by 4% this year- this is more than twice than forecast in January.
In addition ECB president Jean- Claude Trichet is struggling to keep the ECB’s governing council united with the 22 members split in opinion on how far interest rates should be cut and whether the ECB should buy financial assets from the banks- so much is the wrangling that a vow of silence has been imposed on officials!
The German finance minister Peer Steinbruck has also noted concern that "competitive imbalances have built up within the euro area, increasing the exposure of some member states to the financial turmoil". There is also a worry of other countries losing their competitiveness within the eurozone- in particular Italy and Greece.
Stateside, the Fed plans to deliver results of stress tests on US banks to executives today that may show about 10 firms need additional capital to weather a deeper recession. An obvious way for banks to fill their capital requirements is via conversion of preference shares to common shares.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Labels: consolidate debt loans, ECB, falling interest rates, FED, interest rates, UK loans rates, US loans rates
# posted by Dr Search- Principal Consultant at the Search Clinic @ 9:29 AM 0 comments
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Thursday, April 09, 2009
Doubts on easing policy as gilt yields keep rising
It is only a few weeks since quantitative easing programmes were launched on both sides of the Atlantic – but already the effectiveness of the measures is being questioned.
That is because the purchase of government bonds by both the US Federal Reserve and the Bank of England is not helping sustain lower yields.
And it raises the prospect that the central banks will have to increase their fire power.
The Fed has bought more than $30bn of its planned $300bn purchases of Treasury debt since the programme began late last month. In that time, after a sharp initial drop, yields have moved higher, as hefty new supply from the US Treasury continues flowing.
“The Fed’s problem is that the market realises that $300bn in Treasury buy-backs is just a drop in the bucket compared to $2,500bn in net Treasury issuance this fiscal year,” says William O’Donnell, strategist at UBS. “It’s a $300bn thumb in a dyke springing leaks everywhere.”
After falling to 2.5 per cent from 3 per cent when the Fed confirmed it would start buying Treasuries, the yield on the 10 year note is currently back around 2.9 per cent. This week’s selling of stocks has helped lower yields, but the move has been muted for now.
If 10-year US yields rise above 3 per cent, it may negate some of the recent decline in 30-year fixed mortgage rates, which are at historic lows for US home owners.
In the UK, the effectiveness of quantitative easing is also in doubt, after a euphoric start to the programme that saw benchmark yields plunge.
Yields on 10-year UK bonds have risen by about 50 basis points from a low of 2.91 per cent after the Bank of England announced plans to buy up to £75bn ($110bn) of gilts on March 5.
The increase in yields is partly due to signs of risk appetite returning to the markets, which takes away a natural support for gilts and Treasuries. The recent rebound in equity markets, amid hopes of green shoots appearing in the economy, has also put pressure on government bond prices on both sides of the Atlantic.
The rise in Treasury yields has been accompanied by rising inflation expectations as investors worry that the Fed’s outright purchases of Treasuries and mortgages under quantitative easing will ultimately spark inflation.
The expected average inflation rate for the next 10 years recently touched a six-month peak of 1.5 per cent, up from 1.1 per cent last month. Such an inflation expectation, however, is very low and dealers say supply is the main issue for the Treasury market.
The Fed’s planned purchases in Treasury debt this year is a fraction of the overall $6,000bn in outstanding debt and expected hefty supply due in the coming months and years.
Over the next month, at least $200bn in net new issuance is forecast. It means that while the Fed comes in and buys an average of $12bn a week, the US Treasury will pump more supply into the market, pushing yields higher.
For dealers, competition between the Fed and the Treasury creates a favourable trading environment at a time when dealer ranks have been thinned and bid-offer spreads are wider than normal, enhancing profits.
Trading opportunities have also flourished in gilts as dealers report that most sellers to the Bank of England have been hedge funds or bank proprietary desks. Many of these groups have sold bonds at high prices to the Bank of England and then bought them back at lower prices to book quick profits, which has no impact on the economy.
That is preventing the Bank of England from driving yields on 10-year gilts down to 2.5 per cent, a level where so-called real money accounts, such as life insurance companies, are likely to sell. It is hoped that these funds will then buy sterling corporate bonds, lowering the funding costs for UK companies and helping to stimulate the wider economy.
The rise in UK gilt yields comes amid worries that the Bank of England is not as committed to quantitative easing as dealers first thought following comments by Mervyn King, the Bank’s governor, to a parliamentary committee that the programme could be eased should signs of inflation emerge. The Bank may make further comments on quantitative easing after its rate setting meeting today.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
That is because the purchase of government bonds by both the US Federal Reserve and the Bank of England is not helping sustain lower yields.
And it raises the prospect that the central banks will have to increase their fire power.
The Fed has bought more than $30bn of its planned $300bn purchases of Treasury debt since the programme began late last month. In that time, after a sharp initial drop, yields have moved higher, as hefty new supply from the US Treasury continues flowing.
“The Fed’s problem is that the market realises that $300bn in Treasury buy-backs is just a drop in the bucket compared to $2,500bn in net Treasury issuance this fiscal year,” says William O’Donnell, strategist at UBS. “It’s a $300bn thumb in a dyke springing leaks everywhere.”
After falling to 2.5 per cent from 3 per cent when the Fed confirmed it would start buying Treasuries, the yield on the 10 year note is currently back around 2.9 per cent. This week’s selling of stocks has helped lower yields, but the move has been muted for now.
If 10-year US yields rise above 3 per cent, it may negate some of the recent decline in 30-year fixed mortgage rates, which are at historic lows for US home owners.
In the UK, the effectiveness of quantitative easing is also in doubt, after a euphoric start to the programme that saw benchmark yields plunge.
Yields on 10-year UK bonds have risen by about 50 basis points from a low of 2.91 per cent after the Bank of England announced plans to buy up to £75bn ($110bn) of gilts on March 5.
The increase in yields is partly due to signs of risk appetite returning to the markets, which takes away a natural support for gilts and Treasuries. The recent rebound in equity markets, amid hopes of green shoots appearing in the economy, has also put pressure on government bond prices on both sides of the Atlantic.
The rise in Treasury yields has been accompanied by rising inflation expectations as investors worry that the Fed’s outright purchases of Treasuries and mortgages under quantitative easing will ultimately spark inflation.
The expected average inflation rate for the next 10 years recently touched a six-month peak of 1.5 per cent, up from 1.1 per cent last month. Such an inflation expectation, however, is very low and dealers say supply is the main issue for the Treasury market.
The Fed’s planned purchases in Treasury debt this year is a fraction of the overall $6,000bn in outstanding debt and expected hefty supply due in the coming months and years.
Over the next month, at least $200bn in net new issuance is forecast. It means that while the Fed comes in and buys an average of $12bn a week, the US Treasury will pump more supply into the market, pushing yields higher.
For dealers, competition between the Fed and the Treasury creates a favourable trading environment at a time when dealer ranks have been thinned and bid-offer spreads are wider than normal, enhancing profits.
Trading opportunities have also flourished in gilts as dealers report that most sellers to the Bank of England have been hedge funds or bank proprietary desks. Many of these groups have sold bonds at high prices to the Bank of England and then bought them back at lower prices to book quick profits, which has no impact on the economy.
That is preventing the Bank of England from driving yields on 10-year gilts down to 2.5 per cent, a level where so-called real money accounts, such as life insurance companies, are likely to sell. It is hoped that these funds will then buy sterling corporate bonds, lowering the funding costs for UK companies and helping to stimulate the wider economy.
The rise in UK gilt yields comes amid worries that the Bank of England is not as committed to quantitative easing as dealers first thought following comments by Mervyn King, the Bank’s governor, to a parliamentary committee that the programme could be eased should signs of inflation emerge. The Bank may make further comments on quantitative easing after its rate setting meeting today.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Labels: Bank of England, consolidate debt loans, falling interest rates, FED, inflation, interest rates, Quantitative Easing
# posted by Dr Search- Principal Consultant at the Search Clinic @ 8:33 AM 0 comments
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Monday, April 06, 2009
Eurozone interest rates at record low of 1.25pc
The European Central Bank has cut interest rates in the eurozone to a record low of 1.25pc, down from 1.5pc.
Economists had been expecting a bigger reduction of half a percentage point to 1pc, but speaking at a press conference after the monthly decision ECB president Jean-Claude Trichet did not rule out further cuts.
He said that rates may be cut "in a measured way," adding that while inflationary pressures were subsiding, the outlook for the economy remained poor.
"The latest economic data and survey information confirm that the world economy, including the euro area, is undergoing a severe downturn. Both global and euro area demand are likely to remain very weak over 2009, before gradually recovering in the course of 2010," he said.
The ECB's Governing Council has reduced interest rates by a total of three percentage points since early October, after the global financial crisis intensified following Lehman Brothers' collapse in September.
Mr Trichet said the ECB would announce "non-standard" measures at its policy meeting in May in an attempt to stimulate the eurozone economy, which officially entered recession at the end of last year. The Organisation for Economic Co-operation and Development (OECD) predicted earlier this week that the eurozone economy would contract by 4.1pc this year. That is a significantly bigger drop than the 2.2pc to 3.2pc fall forecast by the ECB.
"We expect the ECB to trim its key interest rate to 1pc at its May meeting," said Howard Archer, chief economist at IHS Global Insight. "It is possible that the ECB could eventually bring the interest rate down below 1pc but it looks reluctant to do this and instead will increasingly focus on "non-conventional" measures to boost economic activity."
Options include the lending of funds to banks at fixed interest rates for longer periods, and the purchase of private sector assets.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Economists had been expecting a bigger reduction of half a percentage point to 1pc, but speaking at a press conference after the monthly decision ECB president Jean-Claude Trichet did not rule out further cuts.
He said that rates may be cut "in a measured way," adding that while inflationary pressures were subsiding, the outlook for the economy remained poor.
"The latest economic data and survey information confirm that the world economy, including the euro area, is undergoing a severe downturn. Both global and euro area demand are likely to remain very weak over 2009, before gradually recovering in the course of 2010," he said.
The ECB's Governing Council has reduced interest rates by a total of three percentage points since early October, after the global financial crisis intensified following Lehman Brothers' collapse in September.
Mr Trichet said the ECB would announce "non-standard" measures at its policy meeting in May in an attempt to stimulate the eurozone economy, which officially entered recession at the end of last year. The Organisation for Economic Co-operation and Development (OECD) predicted earlier this week that the eurozone economy would contract by 4.1pc this year. That is a significantly bigger drop than the 2.2pc to 3.2pc fall forecast by the ECB.
"We expect the ECB to trim its key interest rate to 1pc at its May meeting," said Howard Archer, chief economist at IHS Global Insight. "It is possible that the ECB could eventually bring the interest rate down below 1pc but it looks reluctant to do this and instead will increasingly focus on "non-conventional" measures to boost economic activity."
Options include the lending of funds to banks at fixed interest rates for longer periods, and the purchase of private sector assets.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Labels: credit crunch, ECB, euro, falling interest rates, interest rates, recession, refinancing rates
# posted by Dr Search- Principal Consultant at the Search Clinic @ 7:23 PM 0 comments
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Thursday, March 19, 2009
Fed shock the markets with a bumper $1.15 trillion stimulus plan
The Federal Reserve shocked the market with a $1.15 trillion boost for the US economy.
The funds will be used to buy government debt and to liquidate Fannie Mae and Freddie Mac.
The Fed kept interest rates on hold at 0-0.25 % as expected, however the sheer scale of the plans surprised the markets. $300 billion will be made available for longer term treasury securities and $850 billion for the ailing Fannie Mae and Freddie Mac.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
The funds will be used to buy government debt and to liquidate Fannie Mae and Freddie Mac.
The Fed kept interest rates on hold at 0-0.25 % as expected, however the sheer scale of the plans surprised the markets. $300 billion will be made available for longer term treasury securities and $850 billion for the ailing Fannie Mae and Freddie Mac.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Labels: FED, interest rates, Quantitative Easing, US loans rates, US mortgage rates
# posted by Dr Search- Principal Consultant at the Search Clinic @ 9:24 AM 0 comments
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Wednesday, March 11, 2009
RIP Prudence, Zimbabwe here we come
The Bank of England opens a new front in its effort to ward off deflation today as it prepares to buy labour government bonds with newly created money.
The central bank will purchase as much as £2bn of gilts, its first deployment in a three-month plan that may see it spend £75bn. The final results of the operation will be released after 2:45pm. today in London.
The move marks a new departure for British monetary policy after officials cut the interest rate to a record low of 0.5pc on March 5, requiring them to seek new tools to stop the economy’s downward spiral.
While Governor Mervyn King hopes that pumping new money into the financial system will work, he’s relying on banks battered by the crisis to pass it onto lenders.
The Bank of England says it will give details of the auction this morning in London, without being more specific. The bank unveiled the plan last week after delivering a final cut in the key interest rate to a record low of 0.5pc.
Policy makers such as Andrew Sentance are concerned a “prolonged and deep recession” will stoke deflation and the National Institute of Economic and Social Research said today that the slump deepened in the quarter through February.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
The central bank will purchase as much as £2bn of gilts, its first deployment in a three-month plan that may see it spend £75bn. The final results of the operation will be released after 2:45pm. today in London.
The move marks a new departure for British monetary policy after officials cut the interest rate to a record low of 0.5pc on March 5, requiring them to seek new tools to stop the economy’s downward spiral.
While Governor Mervyn King hopes that pumping new money into the financial system will work, he’s relying on banks battered by the crisis to pass it onto lenders.
The Bank of England says it will give details of the auction this morning in London, without being more specific. The bank unveiled the plan last week after delivering a final cut in the key interest rate to a record low of 0.5pc.
Policy makers such as Andrew Sentance are concerned a “prolonged and deep recession” will stoke deflation and the National Institute of Economic and Social Research said today that the slump deepened in the quarter through February.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Labels: Bank of England, consolidate debt loans, interest rates, Loan calculator, UK loans rates
# posted by Dr Search- Principal Consultant at the Search Clinic @ 9:17 AM 0 comments
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Thursday, March 05, 2009
House prices fall a further 2.3pc in February
UK house prices fell 2.3pc in February and by a record 17.8pc year-on-year, according to mortgage lender Halifax.
The sharp fall wiped out any optimism created by the surprise 2pc rise reported for January following a sustained period of falls.
Average house prices in February slid to £160,327, down from £194,953 in the same month a year ago. This takes average prices back to levels last seen in August 2004 and 20pc lower than the peak in late 2007.
One of the biggest problems for the housing market has been the inability among potential buyers to secure mortgages, with banks remaining risk averse and unwilling to lend. The number of first time buyers is now at the lowest level in 35 years.
While the latest mortgage approvals data suggest that activity may have bottomed out, and the Royal Institution of Chartered Surveyors has reported an increase in people making enquiries about buying a house, economists said house prices had further to fall.
Citigroup estimates that about 1.2m homeowners are now in negative equity, where the mortgage is more than the value of the house.
The Bank of England is expected to cut interest rates by half a percentage point to 0.5pc when it announces its monthly decision at midday, which will help some homeowners but further erode savings accounts.
Attention will be focused on the Bank's plans to increase the money supply by billions of pounds by buying Government debt and other assets, details of which are expected alongside the bank rate decision.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
The sharp fall wiped out any optimism created by the surprise 2pc rise reported for January following a sustained period of falls.
Average house prices in February slid to £160,327, down from £194,953 in the same month a year ago. This takes average prices back to levels last seen in August 2004 and 20pc lower than the peak in late 2007.
One of the biggest problems for the housing market has been the inability among potential buyers to secure mortgages, with banks remaining risk averse and unwilling to lend. The number of first time buyers is now at the lowest level in 35 years.
While the latest mortgage approvals data suggest that activity may have bottomed out, and the Royal Institution of Chartered Surveyors has reported an increase in people making enquiries about buying a house, economists said house prices had further to fall.
Citigroup estimates that about 1.2m homeowners are now in negative equity, where the mortgage is more than the value of the house.
The Bank of England is expected to cut interest rates by half a percentage point to 0.5pc when it announces its monthly decision at midday, which will help some homeowners but further erode savings accounts.
Attention will be focused on the Bank's plans to increase the money supply by billions of pounds by buying Government debt and other assets, details of which are expected alongside the bank rate decision.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Labels: Bank of England, falling interest rates, home loans, inflation, interest rates, mortgage calculator
# posted by Dr Search- Principal Consultant at the Search Clinic @ 12:52 PM 0 comments
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Friday, February 06, 2009
Sterling surges on loans rate cut
Yesterday's much anticipated 0.5 % cut by the BoE was greeted with derision from savers.
However the currency markets reacted in a positive manner, continuing to buy Sterling - pushing it to a two month high against the Euro to €1.15 and above $1.45 against the dollar.
Sentiment is key and for the moment the markets are backing the BoE and the UK government's fiscal policy compared to the rigid stance from the ECB.
Yesterday it left rates unchanged but heavily intimated that rates would come down next month - its procrastination on fiscal policy is in the short term driving Sterling higher against the Euro.
Gold continues to move higher. It broke the $1000 barrier as more buyers entered the market. However their appearance did not support traditional commodity currencies such as the South African Rand and Australian Dollar, which continue to fall as their domestic outlook worsens.
In the US today we have unemployment numbers and expectations of another 500,000 jobs lost and although this is a backward looking indicator it does not bode well for the recovery in the US economy as the Obama effect evaporates.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
However the currency markets reacted in a positive manner, continuing to buy Sterling - pushing it to a two month high against the Euro to €1.15 and above $1.45 against the dollar.
Sentiment is key and for the moment the markets are backing the BoE and the UK government's fiscal policy compared to the rigid stance from the ECB.
Yesterday it left rates unchanged but heavily intimated that rates would come down next month - its procrastination on fiscal policy is in the short term driving Sterling higher against the Euro.
Gold continues to move higher. It broke the $1000 barrier as more buyers entered the market. However their appearance did not support traditional commodity currencies such as the South African Rand and Australian Dollar, which continue to fall as their domestic outlook worsens.
In the US today we have unemployment numbers and expectations of another 500,000 jobs lost and although this is a backward looking indicator it does not bode well for the recovery in the US economy as the Obama effect evaporates.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Labels: Bank of England, ECB, falling interest rates, home loans, interest rates, unemployment
# posted by Dr Search- Principal Consultant at the Search Clinic @ 1:41 PM 0 comments
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Thursday, February 05, 2009
Bank of England leads the way on loans rates
Today is the day when the BoE could come very close to running out of bullets when it comes to the weapon of interest rates.
The outcome of today's meeting is split with as many valid arguments for a 0.5 % cut a 1 % cut or even no cut at all.
It could be argued that the consecutive rate cuts that has brought the UK to 1.5 % has yet to fully drip down into the real economy and the Bank should pause before cutting again.
An interesting development this week has been Sterling that has continued to rally and the market is coming to terms with the fact that the UK economy is front loaded with so much bad news that a rally in Sterling was a forgone concluioson.
Expect very little action from the ECB today as a no change 2 % is all but built in and this may see in the short term some Euro buying- although some concerns are arising on the health of eastern europe.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
The outcome of today's meeting is split with as many valid arguments for a 0.5 % cut a 1 % cut or even no cut at all.
It could be argued that the consecutive rate cuts that has brought the UK to 1.5 % has yet to fully drip down into the real economy and the Bank should pause before cutting again.
An interesting development this week has been Sterling that has continued to rally and the market is coming to terms with the fact that the UK economy is front loaded with so much bad news that a rally in Sterling was a forgone concluioson.
Expect very little action from the ECB today as a no change 2 % is all but built in and this may see in the short term some Euro buying- although some concerns are arising on the health of eastern europe.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Labels: Bank of England, consolidate debt loans, falling interest rates, interest rates, Loan calculator
# posted by Dr Search- Principal Consultant at the Search Clinic @ 11:52 AM 0 comments
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Thursday, January 29, 2009
The Federal Reserve posts no surprises on interest rates
With a target Fed Funds Rate ( the rate at which The US major Banks are able to borrow overnight Dollars) already at a 0 - 0.25% level, further cuts are nigh on impossible.
Attention therefore was firmly fixed on any mention of more innovative easing initiatives and also the mood of the accompanying statement. The Fed did not specifically announce a programme of longer term asset buying as part of a shift towards quantitative easing but just confirmed that the current low levels of interest rates were going to be with us for some time to come.
Their prognosis for the economy therefore remains every downbeat with little sign yet of any move towards recovery.
Market opinion therefore is that the previously discussed plan to create an entity to buy a lot of the toxic assets held by US Banks will gather momentum and as long as the Price Is Right, this should free up additional cash for those Banks to lend on to the Corporate Sector.
Still a lot of work to be done here.
One piece of good news out overnight was that the $ 800 billion stimulus package cleared the first hurdle (Congress) on its tortuous route to becoming a real injection. The dark cloud was that not one Republican member voted in favour.
It looks as though Obama is going to have a real battle if he is determined to have these measures approved across the political spectrum. The Dollar and Wall Street however both took heart with the currency making strong gains across the board.
Today sees the auction of $ 30 billion of 5-year notes - a massive amount but it will be vital for the rest of the programme that the sale goes well.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Attention therefore was firmly fixed on any mention of more innovative easing initiatives and also the mood of the accompanying statement. The Fed did not specifically announce a programme of longer term asset buying as part of a shift towards quantitative easing but just confirmed that the current low levels of interest rates were going to be with us for some time to come.
Their prognosis for the economy therefore remains every downbeat with little sign yet of any move towards recovery.
Market opinion therefore is that the previously discussed plan to create an entity to buy a lot of the toxic assets held by US Banks will gather momentum and as long as the Price Is Right, this should free up additional cash for those Banks to lend on to the Corporate Sector.
Still a lot of work to be done here.
One piece of good news out overnight was that the $ 800 billion stimulus package cleared the first hurdle (Congress) on its tortuous route to becoming a real injection. The dark cloud was that not one Republican member voted in favour.
It looks as though Obama is going to have a real battle if he is determined to have these measures approved across the political spectrum. The Dollar and Wall Street however both took heart with the currency making strong gains across the board.
Today sees the auction of $ 30 billion of 5-year notes - a massive amount but it will be vital for the rest of the programme that the sale goes well.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Labels: Barack Obama, falling interest rates, FED, interest rates, US loans rates, US mortgage rates
# posted by Dr Search- Principal Consultant at the Search Clinic @ 11:34 AM 0 comments
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Wednesday, January 28, 2009
Taxpayers bailout failures
All eyes will be on the FOMC meeting today at 7.15pm this evening GMT.
With the rate already at 0-0.25% the focus will not be on whether they will or won't cut (no change is expected) but the wording of any statement releases. It is likely that the focus will shift to the quantitive easing measures that the Fed could use to stimulate the economy.
Particular reference is likely to be made to the three key tools Mr Bernanke outlined in his speech in London on 13 January: credit easing, lending for financial institutions and buying of longer term assets.
It is thought that the Federal Deposit Insurance Corp. (FDIC) may manage a so-called "bad bank" that the Obama administration is likely to set up in an effort to help ailing US banks. The aim is to buy up poor assets on banks' balance sheets.
Plans are expected to be announced early next week. This will, no doubt, place pressure on the UK to come out with a similar package.
Yesterday saw Mandelson announce a £2.3bn support package for the UK's ailing car industry. This financial support will be given on a case by case basis to support training schemes for employees, help out car part suppliers and give grants for ultra low carbon car research and development.
The bailout plans that are being announced will create more reasons for free-market economists to voice their concerns and begs the question coined on the front page of a city paper this morning: "First Banks, Now Cars, What next?"
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
With the rate already at 0-0.25% the focus will not be on whether they will or won't cut (no change is expected) but the wording of any statement releases. It is likely that the focus will shift to the quantitive easing measures that the Fed could use to stimulate the economy.
Particular reference is likely to be made to the three key tools Mr Bernanke outlined in his speech in London on 13 January: credit easing, lending for financial institutions and buying of longer term assets.
It is thought that the Federal Deposit Insurance Corp. (FDIC) may manage a so-called "bad bank" that the Obama administration is likely to set up in an effort to help ailing US banks. The aim is to buy up poor assets on banks' balance sheets.
Plans are expected to be announced early next week. This will, no doubt, place pressure on the UK to come out with a similar package.
Yesterday saw Mandelson announce a £2.3bn support package for the UK's ailing car industry. This financial support will be given on a case by case basis to support training schemes for employees, help out car part suppliers and give grants for ultra low carbon car research and development.
The bailout plans that are being announced will create more reasons for free-market economists to voice their concerns and begs the question coined on the front page of a city paper this morning: "First Banks, Now Cars, What next?"
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Labels: falling interest rates, FOMC, interest rates, UK loans rates, uk recession
# posted by Dr Search- Principal Consultant at the Search Clinic @ 10:45 AM 0 comments
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Tuesday, January 27, 2009
Suddenly global stock markets have gone all bullish
With strong performances from Europe, Wall Street and Japan - all for differing reasons.
The bounce in Financial stocks in London (led by Barclays - when was the last time we saw a Bank share leap nearly 75% in value on a single day?) saw Europe take the lead and give Wall Street a boost on opening. US stocks' recent roller-coaster trading ended at a high with strong support when Pfizer's announced its final plans for their $68 billion takeover of Wyeth.
The rally was underpinned by strong economic data with an unexpected increase in existing US home sales. These factors were just enough to offset further grim corporate news, including a very glum report from Caterpillar (which included an announced 20,000 job losses).
The Nikkei continued the trend this morning though with the index showing a near 5% advance, aided by news the Japanese government is to offer funds to firms whose cash raising ability has been hit by market dislocations.
Data as a whole was sparse again yesterday and attention was drawn to the Economic Forum in Davos. The fact that none of the A-Team from the US (the new President included) will be present - they are too busy with domestic issues - devalues the whole event somewhat.
Expect the participants who are there to attempt to compensate for this by being more high-profile in both opinion and comment.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
The bounce in Financial stocks in London (led by Barclays - when was the last time we saw a Bank share leap nearly 75% in value on a single day?) saw Europe take the lead and give Wall Street a boost on opening. US stocks' recent roller-coaster trading ended at a high with strong support when Pfizer's announced its final plans for their $68 billion takeover of Wyeth.
The rally was underpinned by strong economic data with an unexpected increase in existing US home sales. These factors were just enough to offset further grim corporate news, including a very glum report from Caterpillar (which included an announced 20,000 job losses).
The Nikkei continued the trend this morning though with the index showing a near 5% advance, aided by news the Japanese government is to offer funds to firms whose cash raising ability has been hit by market dislocations.
Data as a whole was sparse again yesterday and attention was drawn to the Economic Forum in Davos. The fact that none of the A-Team from the US (the new President included) will be present - they are too busy with domestic issues - devalues the whole event somewhat.
Expect the participants who are there to attempt to compensate for this by being more high-profile in both opinion and comment.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Labels: Bank of England, credit crunch, interest rates, uk recession
# posted by Dr Search- Principal Consultant at the Search Clinic @ 10:53 AM 0 comments
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Monday, January 26, 2009
Chinese New Year Holiday
Plus today's Australia Day Bank Holiday heralds a very thin Far Eastern market for the next 5 days.
Besides China being off all week, there are holidays in Hongkong (next 3 days) plus Singapore, South Korea and Malaysia (2 days). Add this to the usual thinning of markets towards month end and we are left with a stuttering start to the trading day all week long.
Continued weak economic news still weighs heavily upon both markets and general sentiment with press opinion still very gloomy on the near-term developments. We saw another US bank go under on Saturday, the 3rd this month just as President Obama is considering another massive injection of cash into America's beleaguered banking system. This would be on top of the existing $825 billion package that Obama's senior aides are currently working on.
In the UK, Alistair Darling is bemoaning the recent moves by the markets in response to the Bank rescue package established last week, saying that the City has missed crucial details and that the package will work. Toys and pram come to mind.
The out-going MPC arch-dove, Blanchflower was also in print over the weekend doing what he does best, talking UK interest rates lower. He was however, more bullish than most in his medium term assessment for the UK with a fairly upbeat prognosis as opposed to the outlook for the Eurozone.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Besides China being off all week, there are holidays in Hongkong (next 3 days) plus Singapore, South Korea and Malaysia (2 days). Add this to the usual thinning of markets towards month end and we are left with a stuttering start to the trading day all week long.
Continued weak economic news still weighs heavily upon both markets and general sentiment with press opinion still very gloomy on the near-term developments. We saw another US bank go under on Saturday, the 3rd this month just as President Obama is considering another massive injection of cash into America's beleaguered banking system. This would be on top of the existing $825 billion package that Obama's senior aides are currently working on.
In the UK, Alistair Darling is bemoaning the recent moves by the markets in response to the Bank rescue package established last week, saying that the City has missed crucial details and that the package will work. Toys and pram come to mind.
The out-going MPC arch-dove, Blanchflower was also in print over the weekend doing what he does best, talking UK interest rates lower. He was however, more bullish than most in his medium term assessment for the UK with a fairly upbeat prognosis as opposed to the outlook for the Eurozone.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Labels: falling interest rates, home loans, interest rates, Loan calculator, UK loans rates, uk recession
# posted by Dr Search- Principal Consultant at the Search Clinic @ 1:32 PM 0 comments
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Friday, January 16, 2009
ECB cut 0.5% as expected
The ECB did cut rates but only by the very minimum required and the President, M. Trichet then compounded the disappointment by implying that March would be the next important meeting and as such, no further rate adjustments would take place before then.
The Euro slipped against all other currencies during the trading day.
Concerns were more directed towards developments in both the US Banking system, following the results from JP Morgan, and the UK where estimates of additional capital required by the major domestic Banks, combined to send Bank shares spiralling down and cause rumour after rumour of possible events over the weekend.
Today we really wait for inflation data from the US followed by industrial production and then the Michegan sentiment survey. Following a proliferation of comment from Fed Members last evening, the Dollar has started on the back-foot but ahead of the long weekend in the States expect little further action until 1.30pm.
No data expected from the UK but we expect an announcement from the FSA some time today lifting the ban on the short selling in financial stocks. That won't help the current slide in shares.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
The Euro slipped against all other currencies during the trading day.
Concerns were more directed towards developments in both the US Banking system, following the results from JP Morgan, and the UK where estimates of additional capital required by the major domestic Banks, combined to send Bank shares spiralling down and cause rumour after rumour of possible events over the weekend.
Today we really wait for inflation data from the US followed by industrial production and then the Michegan sentiment survey. Following a proliferation of comment from Fed Members last evening, the Dollar has started on the back-foot but ahead of the long weekend in the States expect little further action until 1.30pm.
No data expected from the UK but we expect an announcement from the FSA some time today lifting the ban on the short selling in financial stocks. That won't help the current slide in shares.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Labels: consolidate debt loans, falling interest rates, interest rates, recession, refinancing rates
# posted by Dr Search- Principal Consultant at the Search Clinic @ 11:55 AM 0 comments
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Thursday, January 15, 2009
More bad news follows bad news
EuroSat reported yesterday that Industrial Production in the Eurozone fell by a massive 7.7% in the past year to November following a downward revision to 5.7% for October.
The Euro stuttered and fell as traders were taken aback by suddenness and size of the European economic slowdown. German data added to the gloom with a back of the envelope calculation on the back of yesterday's GDP release indicating that 4th Qtr GDP (workday adjusted) dropped by 1.4% which equates to a seasonally adjusted annualized rate of decline of an eye-watering 5.6%.
These sorts of numbers now put intense pressure on the ECB later today, to cut their Euro interest rate by at least 50 basis points with the economic environment screaming that nearer a full 1% is required.
Adding to the pressure was the French CPI figure which rose just 1% in the year to December, down from its 3.6% peak in July, and the likely revised figure for the Eurozone December CPI which is expected to show the inflation rate excluding energy for the region to be just 1.4% higher than 1-year ago (no change from the November figure). So not an inkling of any inflationary pressures here.
Nothing significant data-wise from the UK yesterday or today or tomorrow but there was plenty of bad news --- AGAIN. Further forced redundancies in the Financial Sector, more bad news from within Corporate UK plc and a slumping stock market held Sterling back on the exchanges and gave UK bonds a boost with prices rising and yields falling.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
The Euro stuttered and fell as traders were taken aback by suddenness and size of the European economic slowdown. German data added to the gloom with a back of the envelope calculation on the back of yesterday's GDP release indicating that 4th Qtr GDP (workday adjusted) dropped by 1.4% which equates to a seasonally adjusted annualized rate of decline of an eye-watering 5.6%.
These sorts of numbers now put intense pressure on the ECB later today, to cut their Euro interest rate by at least 50 basis points with the economic environment screaming that nearer a full 1% is required.
Adding to the pressure was the French CPI figure which rose just 1% in the year to December, down from its 3.6% peak in July, and the likely revised figure for the Eurozone December CPI which is expected to show the inflation rate excluding energy for the region to be just 1.4% higher than 1-year ago (no change from the November figure). So not an inkling of any inflationary pressures here.
Nothing significant data-wise from the UK yesterday or today or tomorrow but there was plenty of bad news --- AGAIN. Further forced redundancies in the Financial Sector, more bad news from within Corporate UK plc and a slumping stock market held Sterling back on the exchanges and gave UK bonds a boost with prices rising and yields falling.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Labels: credit crunch, ECB, falling interest rates, interest rates, recession
# posted by Dr Search- Principal Consultant at the Search Clinic @ 2:04 PM 0 comments
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Thursday, January 08, 2009
UK Interest rates cut by the MPC expected today
As a UK interest rate cut is built in, we might as well turn our attention to the outlook for Europe, Germany and Euro interest rates.
We know that tomorrow's UK data (industrial production) will be grim but we also know that the MPC will know that the numbers prior to their decision today. Therefore, the immediate outlook for the Eurozone becomes more intriguing.
Recent German data has shown unemployment on the rise (the first move in this direction for 3-years) and the releases over the next couple of days will reinforce the negative sentiment. Tomorrow's industrial production numbers are estimated to be poor to the extent of being horrible.
Using different bases, the figure is projected to show a fall of somewhere between 4% and 7% with the biggest component of the drop coming from the automotive sector with domestic vehicle sales down by a massive 6.6% from 1-year ago and trending still lower. It is a similar story in France with industrial output projected to show a 9% decrease, again with automotives the main culprit. The âpiece de resistance' however could/will be the German GDP figures scheduled for release next Wednesday.
This will not only indicate the 1st estimate for the 4th Qtr but will also produce the 1st estimate of GDP for the whole of 2008. Now I am not up to calculating what this figure is likely to show but a Company that is has come up with the following guestimate. Based upon the already known IFO index and retail sales figures plus their projection for industrial production, they have come up with a seasonally adjusted annualised rate of decline of 8.8%.
Now data like this being released the day prior to the ECB meeting to decide interest rates levels is not what the committee would want to hear. It would make it very, very difficult for them NOT to produce a swathing cut in rates, probably on the back of a sharply weaker Euro.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
We know that tomorrow's UK data (industrial production) will be grim but we also know that the MPC will know that the numbers prior to their decision today. Therefore, the immediate outlook for the Eurozone becomes more intriguing.
Recent German data has shown unemployment on the rise (the first move in this direction for 3-years) and the releases over the next couple of days will reinforce the negative sentiment. Tomorrow's industrial production numbers are estimated to be poor to the extent of being horrible.
Using different bases, the figure is projected to show a fall of somewhere between 4% and 7% with the biggest component of the drop coming from the automotive sector with domestic vehicle sales down by a massive 6.6% from 1-year ago and trending still lower. It is a similar story in France with industrial output projected to show a 9% decrease, again with automotives the main culprit. The âpiece de resistance' however could/will be the German GDP figures scheduled for release next Wednesday.
This will not only indicate the 1st estimate for the 4th Qtr but will also produce the 1st estimate of GDP for the whole of 2008. Now I am not up to calculating what this figure is likely to show but a Company that is has come up with the following guestimate. Based upon the already known IFO index and retail sales figures plus their projection for industrial production, they have come up with a seasonally adjusted annualised rate of decline of 8.8%.
Now data like this being released the day prior to the ECB meeting to decide interest rates levels is not what the committee would want to hear. It would make it very, very difficult for them NOT to produce a swathing cut in rates, probably on the back of a sharply weaker Euro.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Labels: consolidate debt loans, falling interest rates, home loans, interest rates
# posted by Dr Search- Principal Consultant at the Search Clinic @ 5:01 PM 0 comments
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Wednesday, January 07, 2009
Yields, or rather the lack of them
Yields are again the major contributor to the loans calculators debate this morning.
Everything that emerged yesterday pointed to a continuation in rate reduction with the lowly levels being maintained through the time horizon. Added to this, Quatitative Easing has raised its profile once again.
Yesterday we saw further weak economic data from the Eurozone prompting one ECB member, Constancio, to call for a pre-emptive rate cut from the Central Bank - possibly at the same time as the MPC decision tomorrow.
We also had a look at the minutes from the last FOMC meeting in which the Committee made it very clear that they intended to keep US interest rates ‘very low' for an extended period (very low meaning a Fed Funds target rate of zero - 25bp) but focused much more on the ongoing weak state of the economy coupled with the escalating budget deficit and its implications going forward.
Barack Obama underlined this concern when he warned that this year's budget deficit could break through a record $1,000bn – more than double last year's shortfall – and remain above that level "for years to come".
This obviously implies that although official rates will stay close to zero, there will be a requirement to maintain some reasonable degree of return on Treasuries in order to provide an incentive to foreign investors to keep funding the US.
The current 10-year US Government Bond yields about 2.50% and this looks likely to be maintained. The BIG declines in yields are likely to be seen in the Eurozone, Canada and (of great concern to Alistair Darling) the UK.
Given the huge future funding requirement by the UK via gilt issuance, a sharp reduction in long term yields is exactly not what the Chancellor would look for. Indeed the Times this morning were talking of investors preferring the much more attractive returns on offer from Top Rated Corporate Bonds going forward.
And this yield scenario, loan calulator feels, will determine the immediate outlook for currencies in the exchange market with the US Dollar gaining, or at least holding on to recent gains, against the other major currencies.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Everything that emerged yesterday pointed to a continuation in rate reduction with the lowly levels being maintained through the time horizon. Added to this, Quatitative Easing has raised its profile once again.
Yesterday we saw further weak economic data from the Eurozone prompting one ECB member, Constancio, to call for a pre-emptive rate cut from the Central Bank - possibly at the same time as the MPC decision tomorrow.
We also had a look at the minutes from the last FOMC meeting in which the Committee made it very clear that they intended to keep US interest rates ‘very low' for an extended period (very low meaning a Fed Funds target rate of zero - 25bp) but focused much more on the ongoing weak state of the economy coupled with the escalating budget deficit and its implications going forward.
Barack Obama underlined this concern when he warned that this year's budget deficit could break through a record $1,000bn – more than double last year's shortfall – and remain above that level "for years to come".
This obviously implies that although official rates will stay close to zero, there will be a requirement to maintain some reasonable degree of return on Treasuries in order to provide an incentive to foreign investors to keep funding the US.
The current 10-year US Government Bond yields about 2.50% and this looks likely to be maintained. The BIG declines in yields are likely to be seen in the Eurozone, Canada and (of great concern to Alistair Darling) the UK.
Given the huge future funding requirement by the UK via gilt issuance, a sharp reduction in long term yields is exactly not what the Chancellor would look for. Indeed the Times this morning were talking of investors preferring the much more attractive returns on offer from Top Rated Corporate Bonds going forward.
And this yield scenario, loan calulator feels, will determine the immediate outlook for currencies in the exchange market with the US Dollar gaining, or at least holding on to recent gains, against the other major currencies.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Labels: Barack Obama, consolidate debt loans, falling interest rates, interest rates, Loan calculator
# posted by Dr Search- Principal Consultant at the Search Clinic @ 4:49 PM 0 comments
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Monday, January 05, 2009
2009 a Recession or a Full-Blown Depression ?
Judging by the press consensus leading into the start of the New Year's trading, this will depend upon Banks' attitude and lending practices going forward.
A continued squeeze on Credit availability (as witnessed by Friday's BoE report) will cause the downturn to be far more severe and drawn-out than in previous recessions.
The BoE latest credit conditions survey shows that lenders tightened availability of credit to households and individuals alike over the previous quarter and expect to tighten even further in the months to come.
This further contraction of credit facilities will serve to make matters worse unless the Government/Treasury/MPC are able to come up with something more innovative than just cutting interest rates.
This is certainly the view expressed by the Times Shadow MPC at their recent meeting where the members voted 6-3 to leave rates unchanged (with the 3 looking for various degrees of rise). They painstakingly point out, however, that this should not be seen as advocating inaction - on the contrary, they look for the Bank to begin using more unconventional methods for increasing money supply and stimulating the economy.
Thus, despite historical reluctance by the rate setting committee to adjusting official levels at their January meeting, we are likely to see some action at Thursday's meeting including a further cut in the Bank's Base Lending Rate (by 50bp in my opinion - which is the current Market thinking as well at present). We might have to wait for the minutes to be released for more flesh on the bones.
Elsewhere, Janet Yellen, the president of the San Francisco Federal Reserve Bank has advocated "pulling out all the stops" to prevent economic stagnation persisting for longer than might otherwise be necessary. She called for active, discretionary fiscal stimulus in addition to all that has gone before.
This week's UK data looks likely to continue to be very weak with House Prices, Manufacturing Output and Producer Prices all expected to have fallen. This pattern of continued economic weakening will be mirrored in data scheduled from the Eurozone and the US during the coming week. Very little of interest out today however therefore expect a slowish start to the new trading session.
As with the start of every new year, over the coming few days we will be inundated with projections for the coming 12-months, both economic and financial inter-dispersed with calls for a full 1% cut in base rates this coming Thursday.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
A continued squeeze on Credit availability (as witnessed by Friday's BoE report) will cause the downturn to be far more severe and drawn-out than in previous recessions.
The BoE latest credit conditions survey shows that lenders tightened availability of credit to households and individuals alike over the previous quarter and expect to tighten even further in the months to come.
This further contraction of credit facilities will serve to make matters worse unless the Government/Treasury/MPC are able to come up with something more innovative than just cutting interest rates.
This is certainly the view expressed by the Times Shadow MPC at their recent meeting where the members voted 6-3 to leave rates unchanged (with the 3 looking for various degrees of rise). They painstakingly point out, however, that this should not be seen as advocating inaction - on the contrary, they look for the Bank to begin using more unconventional methods for increasing money supply and stimulating the economy.
Thus, despite historical reluctance by the rate setting committee to adjusting official levels at their January meeting, we are likely to see some action at Thursday's meeting including a further cut in the Bank's Base Lending Rate (by 50bp in my opinion - which is the current Market thinking as well at present). We might have to wait for the minutes to be released for more flesh on the bones.
Elsewhere, Janet Yellen, the president of the San Francisco Federal Reserve Bank has advocated "pulling out all the stops" to prevent economic stagnation persisting for longer than might otherwise be necessary. She called for active, discretionary fiscal stimulus in addition to all that has gone before.
This week's UK data looks likely to continue to be very weak with House Prices, Manufacturing Output and Producer Prices all expected to have fallen. This pattern of continued economic weakening will be mirrored in data scheduled from the Eurozone and the US during the coming week. Very little of interest out today however therefore expect a slowish start to the new trading session.
As with the start of every new year, over the coming few days we will be inundated with projections for the coming 12-months, both economic and financial inter-dispersed with calls for a full 1% cut in base rates this coming Thursday.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Labels: BoE, consolidate debt loans, credit crunch, falling interest rates, interest rates, Loan calculator
# posted by Dr Search- Principal Consultant at the Search Clinic @ 11:04 AM 0 comments
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Friday, December 19, 2008
Can Central Banks encourage interbank lending?
As the market expected the ECB tweaked deposit rates to encourage more interbank lending.
The ECB cut the rate it pays to deposit overnight money and increased the rate it charges for emergency loans. The concern from the ECB is that whilst they have slashed their base rate at the fastest pace in the ECB's 10 year history to 2.5% it may not be enough to stimulate the economy as long as banks are refusing to lend to each other.
Banks globally have little confidence in one another and consequently are hording cash and tending to deposit with the Central Banks.
From 21st January the ECB's deposit rate will drop to 100 basis points below the base rate and the marginal lending rate will be increased to 100 basis points above it. Euribor set yesterday at 3.13, the lowest level since July 2006 â but still 63 bp above the base rate; in the seven years to August 2007, before the credit crisis began, the gap averaged only 15bp.
Trichet said on 15th December that there is a limit to how far the central bank can pare rates whilst yesterday Charles Bean (a UK MPC member) signalled that the UK could see rates reach 0%.
This divergence in outlook is continuing to stoke the negative outlook for the sterling euro cross. No doubt Euro zone exporters are hurting as we look towards parity. GBPEUR is currently trading at 1.0617 levels having rallied slightly from the record low seen at 5.20pm yesterday of 1.0456.
GBP was hammered again yesterday, it is currently trading arond 1.5030 level but looks set to test yesterday's low of 1.49. This decline in Sterling from a peak of 2.0335 on 13th March to the year low seen on 4th December of 1.4680 represents a drop of 27.8%. This is the steepest yearly decline since the height of the Great Depression in 1931 when the pound was forced off the gold standard.
France's manufacturing confidence fell to the lowest level in 15 years in December, adding to signs that Europe's third largest economy may move into a recession for the first time since 1993.
Elsewhere, the Bank of Japan cut its benchmark interest rate to 0.1% (from 0.3%) in an effort to boost the economy. JPY saw a 13 year high yesterday against USD of 87.14 and is currently trading at levels of 88.55.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
The ECB cut the rate it pays to deposit overnight money and increased the rate it charges for emergency loans. The concern from the ECB is that whilst they have slashed their base rate at the fastest pace in the ECB's 10 year history to 2.5% it may not be enough to stimulate the economy as long as banks are refusing to lend to each other.
Banks globally have little confidence in one another and consequently are hording cash and tending to deposit with the Central Banks.
From 21st January the ECB's deposit rate will drop to 100 basis points below the base rate and the marginal lending rate will be increased to 100 basis points above it. Euribor set yesterday at 3.13, the lowest level since July 2006 â but still 63 bp above the base rate; in the seven years to August 2007, before the credit crisis began, the gap averaged only 15bp.
Trichet said on 15th December that there is a limit to how far the central bank can pare rates whilst yesterday Charles Bean (a UK MPC member) signalled that the UK could see rates reach 0%.
This divergence in outlook is continuing to stoke the negative outlook for the sterling euro cross. No doubt Euro zone exporters are hurting as we look towards parity. GBPEUR is currently trading at 1.0617 levels having rallied slightly from the record low seen at 5.20pm yesterday of 1.0456.
GBP was hammered again yesterday, it is currently trading arond 1.5030 level but looks set to test yesterday's low of 1.49. This decline in Sterling from a peak of 2.0335 on 13th March to the year low seen on 4th December of 1.4680 represents a drop of 27.8%. This is the steepest yearly decline since the height of the Great Depression in 1931 when the pound was forced off the gold standard.
France's manufacturing confidence fell to the lowest level in 15 years in December, adding to signs that Europe's third largest economy may move into a recession for the first time since 1993.
Elsewhere, the Bank of Japan cut its benchmark interest rate to 0.1% (from 0.3%) in an effort to boost the economy. JPY saw a 13 year high yesterday against USD of 87.14 and is currently trading at levels of 88.55.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Labels: consolidate debt loans, ECB, falling interest rates, interest rates
# posted by Dr Search- Principal Consultant at the Search Clinic @ 9:00 AM 0 comments
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Wednesday, December 17, 2008
Unprecedented Lows BUT where do we go from here?
The Federal Reserve, at their meeting yesterday evening, cut the Federal Funds target rate (the rate at which US Banks can borrow in the overnight) by a massive 75bp to a range of 0% to 0.25% and was additionally very aggressive in the statement that followed.
The decision was unanimous amongst the Board, and the Committee expanded by stating that they were committed to keeping the rate at "exceptionally low levels" for "some time." Quantitative easing itself was not mentioned but there was reference to less conventional methods for the continuation of current policy.
Given that the rate is now essentially zero, economists feel like this was as aggressive as the Fed could get without getting into dangerous territory. Wall Street surged and the Dollar collapsed. This morning, stocks have retraced and the Dollar remains weak. The outlook for the Dollar has to remain a little rocky in the near-term, more-so against the Euro than Sterling with a distinct possibility of seeing 1.4700 before the Euro tops out.
Sterling is struggling to keep up with the Euro so far which isn't surprising given that this morning's release of the minutes from this month's MPC meeting showed a 9-0 vote in favour of the 1% cut and that the committee discussed the possibility of making an even larger cut.
The Fed's action has now instilled in the market the view that the MPC will be compelled to act aggressively and likely sooner rather than later. the ECB, however, are seen to be dragging their feet especially given Trichet's hawkish comments that there were limits to rate cuts. Sterling again hits an all time low against the Euro this morning.
Today we watch and wait. We have a CBI survey released later this morning and the interest rate decision from the Norges Bank this afternoon. Otherwise we will look to Wall Street opening as the catalyst for the next move.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
The decision was unanimous amongst the Board, and the Committee expanded by stating that they were committed to keeping the rate at "exceptionally low levels" for "some time." Quantitative easing itself was not mentioned but there was reference to less conventional methods for the continuation of current policy.
Given that the rate is now essentially zero, economists feel like this was as aggressive as the Fed could get without getting into dangerous territory. Wall Street surged and the Dollar collapsed. This morning, stocks have retraced and the Dollar remains weak. The outlook for the Dollar has to remain a little rocky in the near-term, more-so against the Euro than Sterling with a distinct possibility of seeing 1.4700 before the Euro tops out.
Sterling is struggling to keep up with the Euro so far which isn't surprising given that this morning's release of the minutes from this month's MPC meeting showed a 9-0 vote in favour of the 1% cut and that the committee discussed the possibility of making an even larger cut.
The Fed's action has now instilled in the market the view that the MPC will be compelled to act aggressively and likely sooner rather than later. the ECB, however, are seen to be dragging their feet especially given Trichet's hawkish comments that there were limits to rate cuts. Sterling again hits an all time low against the Euro this morning.
Today we watch and wait. We have a CBI survey released later this morning and the interest rate decision from the Norges Bank this afternoon. Otherwise we will look to Wall Street opening as the catalyst for the next move.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Labels: consolidate debt loans, falling interest rates, FED, interest rates
# posted by Dr Search- Principal Consultant at the Search Clinic @ 8:45 AM 0 comments
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Thursday, December 11, 2008
Global economies continue to feel the pinch
but it is Sterling that continues to bear the brunt of investor's concerns.
The headline in the The Times this morning caused a quick skip in the heartbeat, "Banks under the cosh as £1 tumble towards Euro 1". Loan Calculator wondered what on earth had occurred overnight !!!
As it happened, the headline was very much for effect rather than based on the actual. Sterling is indeed at an all-time low against the Euro but over the past few days has actually stabilised at these levels.
The outlook remains clouded with a big danger of a further ratchet lower but as more dire news emerges from Eurozone, the prospect for a lower cross will diminish. On that note, the magnitude of the declines in both French and German industrial output, reported earlier in the week, were staggering.
This doesn't bode well for tomorrow's industrial output report for the whole of the Eurozone where the estimate is for a decline of 3.7% year-on-year. Somewhere down the line, probably not now until the New Year, there will be a re-assessment of exchange values with, in my view, the Euro being downgraded against all the majors.
We are now in the âdead-zone' data wise with nothing scheduled to come from the UK or Germany for the next 2 days and only the Ind Prod number from the EU. The US and Canada are slightly more exciting but the whole pre-Xmas lull appears to be well and truly upon us. We do have the UK CBI monthly industrial trends survey later this morning but there are no prizes for guessing the mood of that.
As if to pre-empt the figure, the BoE's Kate Barker, in the Scottish Herald paper, lays the situation out - bleak on the economic assessment, with any recovery in the UK unlikely to be evident until the 4th Quarter of 2009, with the likely pace of recovery, very hard to judge.
Elsewhereâ¦.. The big news overnight was the Korean central Bank cutting their official rate by a massive 100 basis points to a record low of 3%. This super-investor in US Treasuries has now cut rates from 4.25% in early October in an unprecedented series of reductions and cites the need to tackle the persistent credit crunch and help the economy to cope with the global downturn.
This morning, the Swiss National Bank have also further reduced their rates by another 50 basis points, bringing their target band down to 0 - 1.00%.
In the US, The House of Representatives agreed to a $14 billion interim loan to GM and Chrysler to tide them over. The affirmation of the bail-out, however, still requires a positive vote following the Senate debate on the matter later today. If passed, this would just sees the two companies through to March 31st â the deadline by which they must file restructure plans (and even then they are not safe).
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
The headline in the The Times this morning caused a quick skip in the heartbeat, "Banks under the cosh as £1 tumble towards Euro 1". Loan Calculator wondered what on earth had occurred overnight !!!
As it happened, the headline was very much for effect rather than based on the actual. Sterling is indeed at an all-time low against the Euro but over the past few days has actually stabilised at these levels.
The outlook remains clouded with a big danger of a further ratchet lower but as more dire news emerges from Eurozone, the prospect for a lower cross will diminish. On that note, the magnitude of the declines in both French and German industrial output, reported earlier in the week, were staggering.
This doesn't bode well for tomorrow's industrial output report for the whole of the Eurozone where the estimate is for a decline of 3.7% year-on-year. Somewhere down the line, probably not now until the New Year, there will be a re-assessment of exchange values with, in my view, the Euro being downgraded against all the majors.
We are now in the âdead-zone' data wise with nothing scheduled to come from the UK or Germany for the next 2 days and only the Ind Prod number from the EU. The US and Canada are slightly more exciting but the whole pre-Xmas lull appears to be well and truly upon us. We do have the UK CBI monthly industrial trends survey later this morning but there are no prizes for guessing the mood of that.
As if to pre-empt the figure, the BoE's Kate Barker, in the Scottish Herald paper, lays the situation out - bleak on the economic assessment, with any recovery in the UK unlikely to be evident until the 4th Quarter of 2009, with the likely pace of recovery, very hard to judge.
Elsewhereâ¦.. The big news overnight was the Korean central Bank cutting their official rate by a massive 100 basis points to a record low of 3%. This super-investor in US Treasuries has now cut rates from 4.25% in early October in an unprecedented series of reductions and cites the need to tackle the persistent credit crunch and help the economy to cope with the global downturn.
This morning, the Swiss National Bank have also further reduced their rates by another 50 basis points, bringing their target band down to 0 - 1.00%.
In the US, The House of Representatives agreed to a $14 billion interim loan to GM and Chrysler to tide them over. The affirmation of the bail-out, however, still requires a positive vote following the Senate debate on the matter later today. If passed, this would just sees the two companies through to March 31st â the deadline by which they must file restructure plans (and even then they are not safe).
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Labels: credit crunch, ECB, falling interest rates, interest rates, Loan calculator
# posted by Dr Search- Principal Consultant at the Search Clinic @ 11:05 PM 0 comments
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US auto manufacturers bail-out rejection
looks like an absolute disaster for Stocks, Commodities and just for a change, Sterling.
The Senate in the US last night, rejected the $14 billion bail-out plan that would have seen a deferment of the cash crisis at GM and Chrysler much to the dismay of markets that were still operating at the time of the decision.
The Dollar spiked to 1.3400 against the Euro but eased back again and the stock futures indicated lower openings today. They weren't wrong. Global auto manufacturers shares have plunged on the opening of the European bourses with fears that Wall street is going to be a bloodbath.
European banking stocks are also on the slide following the trading update from HBOS (ahead of the EGM to approve the takeover by Lloyds). The Bank revised their impairment charges for the year to date by GBP 3.3 billion to give a total hit for the year of GBP 8 billion. All Banking stocks slid by just under 10%.
The main beneficiary from the turbulent Stock Markets is the US Treasury market where lower yields are being seen day by day. Investors are happy to swap yield for security at present.
Interest rates continue to ease.
Taiwan joined the Koreans and Swiss in cutting rates yesterday and with India's factory output falling for the 1st time in 13-years, expect the Reserve Bank to be cutting Rupee rates sometime very soon. Russia were also very high profile in the managed devaluation of the rouble. So with all this going on, and a global recession still very much deepening, why is it that Sterling looks so weak and the Euro and Yen so strong?
Given that the latter 2 currencies come from different ends of the interest rate spectrum then it can't be down to yield. Therefore, you have to work on the basis that every industrial country in the world is now looking to allow their currency to devalue in order to make their exports more attractive so that demand from abroad kick starts their own economies.
All well and good in normal times but it is very obvious that not all currencies can devalue at the same time (at least one has to be the recipient of the diversification and appreciate) and it is the Euro and Yen that are adopting this role for now.
The for now is very important because it implies that in order to emerge from their own recessionary periods, the economies in Euroland and Japan will need the added stimulus of weaker currencies.
Therefore Sterling's weakness does look temporary, if not overdone, BUT in the short term the market has 0.9000 in its sights. The saving grace might be the declining numbers of participants in the market as we get closer to the Xmas holidays.
In the meantime, Sterling has again made record lows against both the Euro and its Trade Weighted basket.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
The Senate in the US last night, rejected the $14 billion bail-out plan that would have seen a deferment of the cash crisis at GM and Chrysler much to the dismay of markets that were still operating at the time of the decision.
The Dollar spiked to 1.3400 against the Euro but eased back again and the stock futures indicated lower openings today. They weren't wrong. Global auto manufacturers shares have plunged on the opening of the European bourses with fears that Wall street is going to be a bloodbath.
European banking stocks are also on the slide following the trading update from HBOS (ahead of the EGM to approve the takeover by Lloyds). The Bank revised their impairment charges for the year to date by GBP 3.3 billion to give a total hit for the year of GBP 8 billion. All Banking stocks slid by just under 10%.
The main beneficiary from the turbulent Stock Markets is the US Treasury market where lower yields are being seen day by day. Investors are happy to swap yield for security at present.
Interest rates continue to ease.
Taiwan joined the Koreans and Swiss in cutting rates yesterday and with India's factory output falling for the 1st time in 13-years, expect the Reserve Bank to be cutting Rupee rates sometime very soon. Russia were also very high profile in the managed devaluation of the rouble. So with all this going on, and a global recession still very much deepening, why is it that Sterling looks so weak and the Euro and Yen so strong?
Given that the latter 2 currencies come from different ends of the interest rate spectrum then it can't be down to yield. Therefore, you have to work on the basis that every industrial country in the world is now looking to allow their currency to devalue in order to make their exports more attractive so that demand from abroad kick starts their own economies.
All well and good in normal times but it is very obvious that not all currencies can devalue at the same time (at least one has to be the recipient of the diversification and appreciate) and it is the Euro and Yen that are adopting this role for now.
The for now is very important because it implies that in order to emerge from their own recessionary periods, the economies in Euroland and Japan will need the added stimulus of weaker currencies.
Therefore Sterling's weakness does look temporary, if not overdone, BUT in the short term the market has 0.9000 in its sights. The saving grace might be the declining numbers of participants in the market as we get closer to the Xmas holidays.
In the meantime, Sterling has again made record lows against both the Euro and its Trade Weighted basket.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Labels: credit crunch, falling interest rates, FED, interest rates, recession
# posted by Dr Search- Principal Consultant at the Search Clinic @ 9:34 PM 0 comments
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Wednesday, December 10, 2008
Continued weak data from Euroland and UK
But neither having a materially long-term effect on exchange rates. The market perception of lower interest rates to come remains unchanged in the market but differences of opinion as to magnitude of cut and timetable are starting to emerge.
Comments from Trichet and Andrew Sentence yesterday added to the uncertainty with the former intimating a pause in ECB rate cutting whilst Sentence appeared to argue both camps for Sterling.
The traditionally arch-hawk of the committee warned of a further weakening of the manufacturing sector in the UK (this followed the report that industrial output in October had fallen by 4.9% y-on-y - the biggest drop in over 6-years) with the recession lasting longer and going deeper than had been previously forecast.
He warned however that policy makers needed to look at different methods for handling the problem implying that interest rates being continually being reduced has less and less impact going forward.
The Zew data from the Eurozone and Germany yesterday were terrible which immediately caused the Euro to tumble through 1.2800. Rumours of semi-official demand however, caused the market to pause which was enough to see it rise sharply back towards 1.3000 where it stopped and near to where we start today.
Sterling fell on the weak UK data and then was hit with the double whammy when Euro rose against the Dollar. This left the cross hitting a new all-time low below 1.1400. This afternoon's testimony in front of the Treasury Select Committee by the Chancellor, Alistair Darling looks like the next chasm for Sterling to negotiate. Although neither party will be out to put the skids under Sterling, the conversation and comment might be viewed very nervously from abroad.
Elsewhere the Canadians did indeed cut their rates as expected but by a larger amount, 0.75%, than had been anticipated. More rate cuts to come from them in the near future. The same conclusion can be reached for Sweden following the release of the sharpest fall in inflation (down from 4% to 2.5%) in their country in 15-years. The Riksbank are expected to progress with their rate cutting programme, with a target of 1% being achieved over the next 3 policy meetings.
In the US, the extreme short end of the Treasury market remains the focus. On Monday, the 3-month bill auction was completed at a yield of a mere 0.005%, but that was surpassed by the 4-week bill sale last night. The minimum bid rate was set at 0.00% with the 'high' bid being established at -0.06%.
In addition, even with a zero yield, the issue was covered 4.20 times and amazingly non-professionals' took 47% of the total - the second largest participation on record. In other words, it wasn't just dealers causing those incredible results - the non-financial market is also quite willing to accept a zero yield (or less) in return for through year-end safety.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Comments from Trichet and Andrew Sentence yesterday added to the uncertainty with the former intimating a pause in ECB rate cutting whilst Sentence appeared to argue both camps for Sterling.
The traditionally arch-hawk of the committee warned of a further weakening of the manufacturing sector in the UK (this followed the report that industrial output in October had fallen by 4.9% y-on-y - the biggest drop in over 6-years) with the recession lasting longer and going deeper than had been previously forecast.
He warned however that policy makers needed to look at different methods for handling the problem implying that interest rates being continually being reduced has less and less impact going forward.
The Zew data from the Eurozone and Germany yesterday were terrible which immediately caused the Euro to tumble through 1.2800. Rumours of semi-official demand however, caused the market to pause which was enough to see it rise sharply back towards 1.3000 where it stopped and near to where we start today.
Sterling fell on the weak UK data and then was hit with the double whammy when Euro rose against the Dollar. This left the cross hitting a new all-time low below 1.1400. This afternoon's testimony in front of the Treasury Select Committee by the Chancellor, Alistair Darling looks like the next chasm for Sterling to negotiate. Although neither party will be out to put the skids under Sterling, the conversation and comment might be viewed very nervously from abroad.
Elsewhere the Canadians did indeed cut their rates as expected but by a larger amount, 0.75%, than had been anticipated. More rate cuts to come from them in the near future. The same conclusion can be reached for Sweden following the release of the sharpest fall in inflation (down from 4% to 2.5%) in their country in 15-years. The Riksbank are expected to progress with their rate cutting programme, with a target of 1% being achieved over the next 3 policy meetings.
In the US, the extreme short end of the Treasury market remains the focus. On Monday, the 3-month bill auction was completed at a yield of a mere 0.005%, but that was surpassed by the 4-week bill sale last night. The minimum bid rate was set at 0.00% with the 'high' bid being established at -0.06%.
In addition, even with a zero yield, the issue was covered 4.20 times and amazingly non-professionals' took 47% of the total - the second largest participation on record. In other words, it wasn't just dealers causing those incredible results - the non-financial market is also quite willing to accept a zero yield (or less) in return for through year-end safety.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Labels: ECB, falling interest rates, inflation, interest rates, Loan calculator
# posted by Dr Search- Principal Consultant at the Search Clinic @ 10:58 PM 0 comments
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Thursday, December 04, 2008
Will the BoE deliver 50 Or 150 basis points today?
Either way, real interest rates are headed to zero (and not only here but in Europe as well).
The difficulty now of course is trying to predict both when and at what level inflation hits the bottom of the cycle. Only then will we be able to predict by how much official rates will need to be cut. Even then, on the assumption that neither Central Bank will veer towards quantitative easing measures, it is likely that the yield curves for periods out to 12-months in both GBP and EURO will remain strongly positive.
Today it appears now widely accepted that cuts in Sterling rates will do nothing to alleviate pressures arising from the headlong plunge into recession. It is still the squeeze deriving from the Credit Crunch that is causing the pain and thus prolonging the time before recovery.
It is essential that the UK Government, by hook or by crook, either finds ways to persuade the High Street Banks to renew lending to the corporate sector especially or introduce ways through which the BoE is able to supply liquidity directly to companies that require it such as the Federal Reserve's ability to purchase short-dated Corporate Debt directly from the issuer or perhaps via an instrument such as the now rarely used Acceptance Credit.
In each case, if the Bank's are unwilling lenders then they could be circumvented.
Today, as stated above, interest rate decisions are the focus and are occurring throughout the day in a proliferation of nations. We have already seen official cuts in New Zealand (down 1.5% as expected), Indonesia (down 0.25% as expected) and in Sweden (down a massive 1.75% - much larger than expected).
The latter move has prompted revisions to the predicted size of the ECB cut later today from 0.50% to as much as 100 basis points; the UK cut prediction still occupies a wide range, as above, but I would see a 1% cut today (to 2%) with more to follow in the spring. We also see a scheduled decision from the Danish Central Bank this afternoon and a possible announcement from The Reserve Bank of India either today or tomorrow.
Sterling looks vulnerable on a larger than 100 basis point cut. We are sitting precariously near the edge of the abyss that is the gap between 1.40 and 1.05 in cable and the all-time low in Sterling/Euro.
This factor must play a part in the MPC's thinking and is yet another reason to consider that the chances for a greater than 1% cut in rates is slim. In the short term, the Euro could possibly benefit on the exchanges through the ECB's leaning towards smaller reductions in rates.
Going forward however, and assuming that Euro real rates are also heading for zero, the obligation will be for the ECB to continue cutting for longer than both the BoE and the Fed and as such the Euro will soften globally on the exchanges going into the 2nd half of 2009.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
The difficulty now of course is trying to predict both when and at what level inflation hits the bottom of the cycle. Only then will we be able to predict by how much official rates will need to be cut. Even then, on the assumption that neither Central Bank will veer towards quantitative easing measures, it is likely that the yield curves for periods out to 12-months in both GBP and EURO will remain strongly positive.
Today it appears now widely accepted that cuts in Sterling rates will do nothing to alleviate pressures arising from the headlong plunge into recession. It is still the squeeze deriving from the Credit Crunch that is causing the pain and thus prolonging the time before recovery.
It is essential that the UK Government, by hook or by crook, either finds ways to persuade the High Street Banks to renew lending to the corporate sector especially or introduce ways through which the BoE is able to supply liquidity directly to companies that require it such as the Federal Reserve's ability to purchase short-dated Corporate Debt directly from the issuer or perhaps via an instrument such as the now rarely used Acceptance Credit.
In each case, if the Bank's are unwilling lenders then they could be circumvented.
Today, as stated above, interest rate decisions are the focus and are occurring throughout the day in a proliferation of nations. We have already seen official cuts in New Zealand (down 1.5% as expected), Indonesia (down 0.25% as expected) and in Sweden (down a massive 1.75% - much larger than expected).
The latter move has prompted revisions to the predicted size of the ECB cut later today from 0.50% to as much as 100 basis points; the UK cut prediction still occupies a wide range, as above, but I would see a 1% cut today (to 2%) with more to follow in the spring. We also see a scheduled decision from the Danish Central Bank this afternoon and a possible announcement from The Reserve Bank of India either today or tomorrow.
Sterling looks vulnerable on a larger than 100 basis point cut. We are sitting precariously near the edge of the abyss that is the gap between 1.40 and 1.05 in cable and the all-time low in Sterling/Euro.
This factor must play a part in the MPC's thinking and is yet another reason to consider that the chances for a greater than 1% cut in rates is slim. In the short term, the Euro could possibly benefit on the exchanges through the ECB's leaning towards smaller reductions in rates.
Going forward however, and assuming that Euro real rates are also heading for zero, the obligation will be for the ECB to continue cutting for longer than both the BoE and the Fed and as such the Euro will soften globally on the exchanges going into the 2nd half of 2009.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Labels: credit crunch, falling interest rates, interest rates, recession
# posted by Dr Search- Principal Consultant at the Search Clinic @ 10:33 PM 0 comments
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Friday, November 28, 2008
Typical Thanksgiving Day Holiday
In terms of volumes and liquidity left us trading very tight ranges yesterday and with tradition dictating an early close today in the US equity markets and with a lot of the rest of the workforce extending the holiday into the weekend, we are destined for another quiet one.
There is also very little data on today's agenda and nothing market sensitive scheduled for the weekend.
This morning so far we have already seen a slightly better than forecast result for UK Consumer Confidence, much in the same vein as the rest of Europe and are left awaiting the CBI Distributive Trade Survey.
This is anticipated to be a weak number once again and with all the High Street bad news in the press, is likely to remain soft going forward. The FT, in an article this morning, ârubber stamp' a 50 basis point cut by the ECB next week, which the market still feels will be the first of a few cuts in the coming months.
The UK still also expected to reduce rates by the same magnitude but the weekend press will be important for the health of Sterling going into December.
Other than that, we have the EU flash estimate for inflation and unemployment later this morning but that should be too little and too late to influence today's end of month trading. This weekend sees an OPEC consultative meeting taking place in Cairo which should pave the way for discussions on a production cut at their official meeting later in December.
There are mutterings that OPEC want to reduce the current OECD oil stocks fall by about 100 million barrels to around 52 days of forward cover from its present 55 days.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
There is also very little data on today's agenda and nothing market sensitive scheduled for the weekend.
This morning so far we have already seen a slightly better than forecast result for UK Consumer Confidence, much in the same vein as the rest of Europe and are left awaiting the CBI Distributive Trade Survey.
This is anticipated to be a weak number once again and with all the High Street bad news in the press, is likely to remain soft going forward. The FT, in an article this morning, ârubber stamp' a 50 basis point cut by the ECB next week, which the market still feels will be the first of a few cuts in the coming months.
The UK still also expected to reduce rates by the same magnitude but the weekend press will be important for the health of Sterling going into December.
Other than that, we have the EU flash estimate for inflation and unemployment later this morning but that should be too little and too late to influence today's end of month trading. This weekend sees an OPEC consultative meeting taking place in Cairo which should pave the way for discussions on a production cut at their official meeting later in December.
There are mutterings that OPEC want to reduce the current OECD oil stocks fall by about 100 million barrels to around 52 days of forward cover from its present 55 days.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Labels: Bank of England, credit crunch, ECB, interest rates, Oil
# posted by Dr Search- Principal Consultant at the Search Clinic @ 10:45 AM 0 comments
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Wednesday, November 26, 2008
Global inflation continues to spiral lower
Data scheduled to be released today/tomorrow from the German states followed by the figure for the country as a whole, are expected to show a further profound slowdown in perceived inflation.
The overall figure is expected to show a fall in the November CPI of 0.2% with HICP at +1.7%. This, coupled with recent weak economic data, MUST push the ECB to cut rates by at least 50 basis points at their 4th December meeting.
Given this morning's announcement from the Chinese Central Bank that they are reducing both their interest rates and domestic banks' required reserves, "to ensure enough liquidity in the banking system to aid growth", and following the decision from the Swiss National Bank last week to cut their rates, it looks as though we will see further BIG cuts in Official Interest Rates from all the major economies by Christmas.
The one abstainer will be Japan who do not have the scope to cut, a situation that will be mirrored in the US very soon, once their own rates get down to 0.5%.
The one bright point on the economic radar at present is the up-tick in global consumer sentiment with higher than expected figures seen from Germany, US and the UK over the past few days and from France this morning.
With consumers' feel-good-factor largely reliant upon stock markets and fuel prices, it is the recent sharp drop in petrol prices that seems to have been the catalyst. Don't hang the flags out just yet.
A further package of US Government / Federal Reserve assistance was announced yesterday afternoon by the soon-to-be-replaced Treasury Secretary, Paulson. He added an additional $800 billion to the already burgeoning sum in the pipeline. this takes to $ 1.7 trillion the total taxpayer funds being used to bail out America, with a further $500 billion of tax cuts in the pipeline.
It just shows just how astounded Washington is at the severity of the recession and the speed at which it is affecting the country.
Exchange rates moved consistently with the technicals yesterday with cable shying away from the 1.5500 level overnight to open 1.5 cents lower this morning. Ahead of tomorrows market closing Thanksgiving holiday in the US, expect to find exchange rates a bit subdued today. There is plenty of data from the US this afternoon but given the current state of thinking, none of it should seriously worry the markets.
The European traders will need to fill the gap between 1.5380 and 1.5520 today before they consider which way to push it. I would look for a further move higher over the next few weeks but with interest rate differentials definitely narrowing in the Dollar's favour during the 1st Quarter 2009, expect a modicum of Dollar strength to ensue.
Keeping the Dollar under pressure in the short term, if it is correct, is a report in the Times that Middle East Sovereign Wealth Funds are switching out of investments in western markets to focus on domestic considerations.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
The overall figure is expected to show a fall in the November CPI of 0.2% with HICP at +1.7%. This, coupled with recent weak economic data, MUST push the ECB to cut rates by at least 50 basis points at their 4th December meeting.
Given this morning's announcement from the Chinese Central Bank that they are reducing both their interest rates and domestic banks' required reserves, "to ensure enough liquidity in the banking system to aid growth", and following the decision from the Swiss National Bank last week to cut their rates, it looks as though we will see further BIG cuts in Official Interest Rates from all the major economies by Christmas.
The one abstainer will be Japan who do not have the scope to cut, a situation that will be mirrored in the US very soon, once their own rates get down to 0.5%.
The one bright point on the economic radar at present is the up-tick in global consumer sentiment with higher than expected figures seen from Germany, US and the UK over the past few days and from France this morning.
With consumers' feel-good-factor largely reliant upon stock markets and fuel prices, it is the recent sharp drop in petrol prices that seems to have been the catalyst. Don't hang the flags out just yet.
A further package of US Government / Federal Reserve assistance was announced yesterday afternoon by the soon-to-be-replaced Treasury Secretary, Paulson. He added an additional $800 billion to the already burgeoning sum in the pipeline. this takes to $ 1.7 trillion the total taxpayer funds being used to bail out America, with a further $500 billion of tax cuts in the pipeline.
It just shows just how astounded Washington is at the severity of the recession and the speed at which it is affecting the country.
Exchange rates moved consistently with the technicals yesterday with cable shying away from the 1.5500 level overnight to open 1.5 cents lower this morning. Ahead of tomorrows market closing Thanksgiving holiday in the US, expect to find exchange rates a bit subdued today. There is plenty of data from the US this afternoon but given the current state of thinking, none of it should seriously worry the markets.
The European traders will need to fill the gap between 1.5380 and 1.5520 today before they consider which way to push it. I would look for a further move higher over the next few weeks but with interest rate differentials definitely narrowing in the Dollar's favour during the 1st Quarter 2009, expect a modicum of Dollar strength to ensue.
Keeping the Dollar under pressure in the short term, if it is correct, is a report in the Times that Middle East Sovereign Wealth Funds are switching out of investments in western markets to focus on domestic considerations.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Labels: falling interest rates, inflation, interest rates, recession
# posted by Dr Search- Principal Consultant at the Search Clinic @ 10:08 AM 0 comments
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Thursday, November 20, 2008
MPC- more interest rates cuts on the cards
The minutes from this month's Monetary Policy Committee meeting revealed that the MPC recognised the need for a cut in rates of at least 200 bp to ensure that their long-term inflationary goals would be met.
However, they decided that a cut of this magnitude might have serious adverse effects on the value of the currency and hence distort inflation measures in the short term. They also decided to keep at least some of their powder dry so that additional easing could be introduced at later dates in order to try and improve sentiment as/if the economy worsens.
On the back of this it looks odds on that we will see a further cut at the December meeting with the market looking for a 0.50% move lower in rates. Period rates ought to continue to ease on this assumption but so far, there has been little evidence of this happening to any great degree.
Yesterday, we also had the presumed gloomy CBI Manufacturing survey and the market was not disappointed. Despite a small up-tick in the orders index, the overall report was awful with the November index of expected orders falling to a 28-year low. More ammunition for the further rate cuts brigade.
Today will bring the October data for UK Retail Sales. There is absolutely no doubt that the figures will be grim following press reports of dismal High Street conditions and pre-Xmas sales announcements from such stalwarts as Marks & Spencer, John Lewis and Debenhams.
It would not be a surprise if, even in the Xmas run in, we saw a complete standstill in consumer spending y-on-y although the expectations are for a small rise.
The Federal Reserve minutes from the last meeting were also out yesterday afternoon but followed a similar pattern to the UK version. The Board revealed a gloomy economic outlook with potential for further monetary easing. They lowered their estimates for GDP and increased their projected unemployment level, both for the end of 2009.
One thing that was mentioned in the minutes, and something that will crop up more and more in the future given the global economic situation plus the ultra low level of interest rates, is quantitative easing. This entails a government introducing measures that not only flood the market with excess liquidity but also reduce long term interest rates.
Last used in Japan during their long period of deflation (not to any great effect for a long time I add) and likely to become more popular amongst Western Governments during a prolonged grind down in economic activity.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
However, they decided that a cut of this magnitude might have serious adverse effects on the value of the currency and hence distort inflation measures in the short term. They also decided to keep at least some of their powder dry so that additional easing could be introduced at later dates in order to try and improve sentiment as/if the economy worsens.
On the back of this it looks odds on that we will see a further cut at the December meeting with the market looking for a 0.50% move lower in rates. Period rates ought to continue to ease on this assumption but so far, there has been little evidence of this happening to any great degree.
Yesterday, we also had the presumed gloomy CBI Manufacturing survey and the market was not disappointed. Despite a small up-tick in the orders index, the overall report was awful with the November index of expected orders falling to a 28-year low. More ammunition for the further rate cuts brigade.
Today will bring the October data for UK Retail Sales. There is absolutely no doubt that the figures will be grim following press reports of dismal High Street conditions and pre-Xmas sales announcements from such stalwarts as Marks & Spencer, John Lewis and Debenhams.
It would not be a surprise if, even in the Xmas run in, we saw a complete standstill in consumer spending y-on-y although the expectations are for a small rise.
The Federal Reserve minutes from the last meeting were also out yesterday afternoon but followed a similar pattern to the UK version. The Board revealed a gloomy economic outlook with potential for further monetary easing. They lowered their estimates for GDP and increased their projected unemployment level, both for the end of 2009.
One thing that was mentioned in the minutes, and something that will crop up more and more in the future given the global economic situation plus the ultra low level of interest rates, is quantitative easing. This entails a government introducing measures that not only flood the market with excess liquidity but also reduce long term interest rates.
Last used in Japan during their long period of deflation (not to any great effect for a long time I add) and likely to become more popular amongst Western Governments during a prolonged grind down in economic activity.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Labels: Bank of Japan, falling interest rates, FED, interest rates
# posted by Dr Search- Principal Consultant at the Search Clinic @ 10:33 AM 0 comments
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Tuesday, November 18, 2008
A Better Day for Sterling
On the back of very little, Sterling bounced quite sharply against both Dollar and Euro yesterday and retained most of the gains overnight.
It appears that the market views the stance being adopted by the UK authorities in a mildly positive manner, especially given the apparent continued deterioration of the Eurozone and US economies.
Following on from that, the initial elation at the headline rebound in US Industrial Production yesterday dissipated once the grim and declining trend was revealed. The severe downward correction to September's figure and the removal of the post-Hurricane Ike effect leaves a very sorry picture and immediately provoked calls/demands/predictions of a 50bp interest cut at the next Fed meeting in December.
This flies in the face of comments by the Fed's Hoeing who noted that the economic downturn was worse than expected but that the Central Bank was already running "a very accommodative" policy. Importantly, he added that they had done about as much as they were able to aid the economy.
Against this, the San Francisco Fed's own staff economists expect the US economy to continue to contract through the 1st half of 2009 and that the unemployment rate will hit a peak at around 8.00% from its current 6.5%, still well below the post-depression peak of 10.7% reached in 1982 although that is no foregone conclusion.
Short date interest rates continue to ease with supplies of funds at this end of the curve in plentiful supply. Period rates still remain stubbornly higher as demand for longer term remains far greater than the current supply. This will likely continue for some time to come until confidence returns.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
It appears that the market views the stance being adopted by the UK authorities in a mildly positive manner, especially given the apparent continued deterioration of the Eurozone and US economies.
Following on from that, the initial elation at the headline rebound in US Industrial Production yesterday dissipated once the grim and declining trend was revealed. The severe downward correction to September's figure and the removal of the post-Hurricane Ike effect leaves a very sorry picture and immediately provoked calls/demands/predictions of a 50bp interest cut at the next Fed meeting in December.
This flies in the face of comments by the Fed's Hoeing who noted that the economic downturn was worse than expected but that the Central Bank was already running "a very accommodative" policy. Importantly, he added that they had done about as much as they were able to aid the economy.
Against this, the San Francisco Fed's own staff economists expect the US economy to continue to contract through the 1st half of 2009 and that the unemployment rate will hit a peak at around 8.00% from its current 6.5%, still well below the post-depression peak of 10.7% reached in 1982 although that is no foregone conclusion.
Short date interest rates continue to ease with supplies of funds at this end of the curve in plentiful supply. Period rates still remain stubbornly higher as demand for longer term remains far greater than the current supply. This will likely continue for some time to come until confidence returns.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Labels: falling interest rates, interest rates, UK loans rates, uk recession
# posted by Dr Search- Principal Consultant at the Search Clinic @ 10:55 AM 0 comments
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Thursday, November 13, 2008
Interest rates at zero per cent to come?
Strolling towards Lower Thames Street yesterday evening, the Evening Standard sales placards' were shouting "Interest rates To Go To 0%".
Now you really needed to buy the paper to see what the article said but as I was on my way out, I couldn't be asked. Going back a few hours, Mervyn King, fronting the BoE at their release of the Quarterly Inflation Report, made it very clear that the Bank views the risks in the economy at present to be growth or rather the lack of it.
He stated that inflation next year would fall to 1% with a possibility of it actually going negative in the 12-18 month timespan. This meant that interest rates would be cut further and sooner rather than later. HSBC this morning are calling for a 50bp cut at each of the next 4 MPC meetings.
Personally, I think that is too much. I can see real interest rates being cut to zero but with core inflation still sitting at a tad above 2% and not really moving, I feel a further 100bp cut would be ample.
Talking of Money Markets, the coordinated rate cut that I earlier mused might follow this weekend's G20 meeting in Washington is still on the cards even more likely should tomorrow's Eurozone GDP figure come in as dire as is being predicted. Let's get the cuts out of the way and we can all settle down to enjoy the festive season.
In the US, Paulson is still fiddling with his Banking rescue package, now deciding that the fund will not be used to buy distressed assets but rather, and in line with European examples, to purchase stakes in Financial Institutions. This marks a complete u-turn from the original announcement and should be the catalyst that starts freeing up the lending within the US.
Oil remains on a slippery slope with Brent crude at one point, a whisker away from $50 per barrel. As has been made clear in the past, cartels don't really work during a period of rapidly declining prices.
Although OPEC talk a good game, cutting production quotas in order to put a floor under the price, the fact is that the smaller members maintain or even increase production in order to sustain their revenue.
What else? Oh yes, cable plunged through 1.50 on its headlong rush down and the Sterling Trade Weighted Index fell to a 12-year low this morning as traders took on board the BoE comments from yesterday. We saw a low of 1.4807 in USD/Sterling and 1.1919 in Sterling /Euro.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Now you really needed to buy the paper to see what the article said but as I was on my way out, I couldn't be asked. Going back a few hours, Mervyn King, fronting the BoE at their release of the Quarterly Inflation Report, made it very clear that the Bank views the risks in the economy at present to be growth or rather the lack of it.
He stated that inflation next year would fall to 1% with a possibility of it actually going negative in the 12-18 month timespan. This meant that interest rates would be cut further and sooner rather than later. HSBC this morning are calling for a 50bp cut at each of the next 4 MPC meetings.
Personally, I think that is too much. I can see real interest rates being cut to zero but with core inflation still sitting at a tad above 2% and not really moving, I feel a further 100bp cut would be ample.
Talking of Money Markets, the coordinated rate cut that I earlier mused might follow this weekend's G20 meeting in Washington is still on the cards even more likely should tomorrow's Eurozone GDP figure come in as dire as is being predicted. Let's get the cuts out of the way and we can all settle down to enjoy the festive season.
In the US, Paulson is still fiddling with his Banking rescue package, now deciding that the fund will not be used to buy distressed assets but rather, and in line with European examples, to purchase stakes in Financial Institutions. This marks a complete u-turn from the original announcement and should be the catalyst that starts freeing up the lending within the US.
Oil remains on a slippery slope with Brent crude at one point, a whisker away from $50 per barrel. As has been made clear in the past, cartels don't really work during a period of rapidly declining prices.
Although OPEC talk a good game, cutting production quotas in order to put a floor under the price, the fact is that the smaller members maintain or even increase production in order to sustain their revenue.
What else? Oh yes, cable plunged through 1.50 on its headlong rush down and the Sterling Trade Weighted Index fell to a 12-year low this morning as traders took on board the BoE comments from yesterday. We saw a low of 1.4807 in USD/Sterling and 1.1919 in Sterling /Euro.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Labels: falling interest rates, interest rates, recession, US loans rates
# posted by Dr Search- Principal Consultant at the Search Clinic @ 11:42 AM 0 comments
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Friday, November 07, 2008
Interest rates cut by how much?
Loans Calculators have sat through various BoE / MPC meeting/announcements when the Central Bank have surprised the market far more frequently on the hawkish side as it turns out but never has the market been so caught out by a UK decision.
The minutes in 2-weeks time have become more important than ever with the chance that the vote for a 150bp cut was unanimous inconceivable.
The process by which the committee came to the decision, will therefore be avidly anticipated. Last night's evaluation of the cut and its likely effect centred solely on just how much of the cut will filter through to the economy as a whole and how much would be absorbed by Banks to enhance their capital position and their bottom line.
Government pressure must be brought to bear especially as they are a major stakeholder in most of the major institutions after nationalising them.
There was very little market reaction immediately following the news as dealers, investors and the like seemed to be at a loss as to what they should do next.
The ECB weighed in with their expected 50 basis point cut bringing its rate down to 3.25% - a 75 point cut was discussed but ultimately rejected. According to ECB President Trichet euro zone inflation was expected to continue to fall back hinting strongly that another rate cut could follow as early as next month.
Reacting to the interest cuts and an IMF report released yesterday predicting that the world's developed economies were heading for their first full year contraction since the Second World War stock markets took fright and share values plummeted.
In New York the Dow Jones ended down 443 points or 4.85% following a decline of 5.7% in the FTSE 100. There were similar declines in Asian markets with the NIKKEI dropping 3.55%.
Turning our attention to today's key data all eyes will be on the US non farm payroll numbers for October due for release at 1:30pm GMT. Expectations are for a decline in jobs by some 230,000 taking the unemployment rate to 6.3% from 6.1% in September.
The effects of Hurricane Ike came too late to be fully reflected in September's figures so we could see the delayed impact of hurricane related disruption in this months figure. Not surprisingly private service sector job losses have accelerated adding to continuing reductions in manufacturing and construction jobs.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
The minutes in 2-weeks time have become more important than ever with the chance that the vote for a 150bp cut was unanimous inconceivable.
The process by which the committee came to the decision, will therefore be avidly anticipated. Last night's evaluation of the cut and its likely effect centred solely on just how much of the cut will filter through to the economy as a whole and how much would be absorbed by Banks to enhance their capital position and their bottom line.
Government pressure must be brought to bear especially as they are a major stakeholder in most of the major institutions after nationalising them.
There was very little market reaction immediately following the news as dealers, investors and the like seemed to be at a loss as to what they should do next.
The ECB weighed in with their expected 50 basis point cut bringing its rate down to 3.25% - a 75 point cut was discussed but ultimately rejected. According to ECB President Trichet euro zone inflation was expected to continue to fall back hinting strongly that another rate cut could follow as early as next month.
Reacting to the interest cuts and an IMF report released yesterday predicting that the world's developed economies were heading for their first full year contraction since the Second World War stock markets took fright and share values plummeted.
In New York the Dow Jones ended down 443 points or 4.85% following a decline of 5.7% in the FTSE 100. There were similar declines in Asian markets with the NIKKEI dropping 3.55%.
Turning our attention to today's key data all eyes will be on the US non farm payroll numbers for October due for release at 1:30pm GMT. Expectations are for a decline in jobs by some 230,000 taking the unemployment rate to 6.3% from 6.1% in September.
The effects of Hurricane Ike came too late to be fully reflected in September's figures so we could see the delayed impact of hurricane related disruption in this months figure. Not surprisingly private service sector job losses have accelerated adding to continuing reductions in manufacturing and construction jobs.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Labels: Bank of England, consolidate debt loans, ECB, falling interest rates, interest rates, Loan calculator, MPC
# posted by Dr Search- Principal Consultant at the Search Clinic @ 10:01 AM 0 comments
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Thursday, November 06, 2008
Anything is possible I suppose
But I am still of the opinion that the MPC will cut by 50bp today with a dovish set of minutes to follow and further cuts in the months to come.
Having said that, there is still considerable column inches being devoted to arguments for larger cuts at today's MPC meeting with the most extreme view being expressed by ex-committee member Willem Buiter. In the Telegraph this morning he argues the need for a cut of 150 basis points. The majority of polls still go for a move lower by 0.50% but with the risk skewed firmly towards a larger cut. We will know at midday.
The BIG unknown is how any move from the MPC will be reflected in the LIBOR market and whether lower rates will equate to a freeing up of credit for the beleaguered UK corporate market.
The Treasury, as part of their rescue package for the UK Banking system, demanded that in return for the bail-out, the Banks concerned had to maintain their lending at 2007 levels. The Council of Mortgage Lenders (the main lobby group for Banks and Building Societies) however, seemed to give the go ahead to its members yesterday to ignore this dictat by suggesting that it would not make commercial sense to insist or even expect that lenders automatically would pass on rate cuts to their borrowers.
In this case, it would seem senseless for the MPC/BoE to use up all its ammunition in one attempt to kick start an economy still in decline. Better to temper the cuts and produce them in a more strategic manner.
There is another policy meeting taking place today and it is very important to watch the ECB Council's decision on Euro Zone interest rates, plus M. Trichet's comments after the decision, for signs that the ECB is truly on board with other central banks in seeking to lower interest rates. Traders and investors across the board are expecting a 0.50% rate cut today.
However, it is worth bearing in mind that the hypothesis of a 50 basis point easing did not originate in Frankfurt. It was invented by the markets. M. Trichet may not be keen to be seen to be promising the markets that the ECB will continue to cut rates willy-nilly until the world economy is fixed.
Elsewhere, the Obama factor for the Dollar ran out of steam quite suddenly as a supposed Middle Eastern Central Bank's euro buying programme took hold. This coincided with a couple of sets of very weak figures from the US which filled the market with doom and gloom ahead of the non-farm payrolls figure on Friday.
Expectations for this number were hastily reviewed with the new estimated figure being nearer a 200,000 fall compared to the original 150,000. The short term outlook for the US economy is still grim and hence any significant Dollar appreciation will likely have to be deferred until next year when the new Administration begins to make a difference.
In the meantime, and with liquidity in markets falling away pre-Christmas and ahead of year end trading, volatility around major data releases will take over. To this end, keep an eye on the important figures coming upâ¦. traders will most certainly be doing so.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Having said that, there is still considerable column inches being devoted to arguments for larger cuts at today's MPC meeting with the most extreme view being expressed by ex-committee member Willem Buiter. In the Telegraph this morning he argues the need for a cut of 150 basis points. The majority of polls still go for a move lower by 0.50% but with the risk skewed firmly towards a larger cut. We will know at midday.
The BIG unknown is how any move from the MPC will be reflected in the LIBOR market and whether lower rates will equate to a freeing up of credit for the beleaguered UK corporate market.
The Treasury, as part of their rescue package for the UK Banking system, demanded that in return for the bail-out, the Banks concerned had to maintain their lending at 2007 levels. The Council of Mortgage Lenders (the main lobby group for Banks and Building Societies) however, seemed to give the go ahead to its members yesterday to ignore this dictat by suggesting that it would not make commercial sense to insist or even expect that lenders automatically would pass on rate cuts to their borrowers.
In this case, it would seem senseless for the MPC/BoE to use up all its ammunition in one attempt to kick start an economy still in decline. Better to temper the cuts and produce them in a more strategic manner.
There is another policy meeting taking place today and it is very important to watch the ECB Council's decision on Euro Zone interest rates, plus M. Trichet's comments after the decision, for signs that the ECB is truly on board with other central banks in seeking to lower interest rates. Traders and investors across the board are expecting a 0.50% rate cut today.
However, it is worth bearing in mind that the hypothesis of a 50 basis point easing did not originate in Frankfurt. It was invented by the markets. M. Trichet may not be keen to be seen to be promising the markets that the ECB will continue to cut rates willy-nilly until the world economy is fixed.
Elsewhere, the Obama factor for the Dollar ran out of steam quite suddenly as a supposed Middle Eastern Central Bank's euro buying programme took hold. This coincided with a couple of sets of very weak figures from the US which filled the market with doom and gloom ahead of the non-farm payrolls figure on Friday.
Expectations for this number were hastily reviewed with the new estimated figure being nearer a 200,000 fall compared to the original 150,000. The short term outlook for the US economy is still grim and hence any significant Dollar appreciation will likely have to be deferred until next year when the new Administration begins to make a difference.
In the meantime, and with liquidity in markets falling away pre-Christmas and ahead of year end trading, volatility around major data releases will take over. To this end, keep an eye on the important figures coming upâ¦. traders will most certainly be doing so.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Labels: Bank of England, ECB, falling interest rates, interest rates, MPC
# posted by Dr Search- Principal Consultant at the Search Clinic @ 10:40 AM 0 comments
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Wednesday, November 05, 2008
Well that's the easy bit done
As had been well anticipated, Senator McCain conceded the Presidential contest to Senator Obama early this morning.
In the senate elections however, the Democrats have fallen short of the 60 seat filibuster-proof level that had been talked about in the run up to yesterday. Obama will now have 2 and bit months until he is sworn in as President on 20th January during which time interest will be high in his preparations for power.
Who will form the core of his administration? How will he propose to reduce the burgeoning US deficits? What is his view on the Financial crisis and how the current administration have sought to alleviate the problem?
Added to this is the question on every US citizen's mind, being can he pull the US economy round via an Obama feel-good factor alone or will in need a further stimulus package? And that is without any Foreign Policy considerations. Could be an interesting 10 weeks.
The US economic back-drop is not a pretty picture at present with the car market the focus â¦. Yesterday's news that US auto sales plummeted by 32% in October to its lowest monthly total since January 1991 provoked increased calls for new Federal Aid for the industry.
The present sales annual rate of 10.7 million unit is way below the break-even number of 16.2 million, and still falling. Something needs to be done to revive the consumer's confidence in the immediate future to get them back spending.
Ahead of the MPC meeting today/tomorrow we have had mixed signals from the economy, but most of them still negative.
While the mechanical effects of the big drop in energy and food prices seem likely to push the headline down below the rate of increase of the core very quickly, core CPI has been accelerating: Prices ex-food, -energy, -alcohol and âtobacco were 2.2% higher than a year ago in the latest report, almost double their yearly rate of increase in the first quarter.
This will obviously be a major discussion point for the MPC who must decide whether they are confident enough that ALL inflation risks have been contained and that price expectations are sufficiently well contained.
KPMG/REC reported the fastest falls in appointments and advertised vacancies in the history of their employment survey.The survey indicated that pay had shown the first fall in five years, with permanent pay falling to a reading of 45.7 from 50.0 in September and temporary pay falling to 47.0 from 50.4 in September.
The survey provides a very strong signal that UK unemployment is set to rise significantly in the next few months and into 2009, and earnings growth will be weak.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
In the senate elections however, the Democrats have fallen short of the 60 seat filibuster-proof level that had been talked about in the run up to yesterday. Obama will now have 2 and bit months until he is sworn in as President on 20th January during which time interest will be high in his preparations for power.
Who will form the core of his administration? How will he propose to reduce the burgeoning US deficits? What is his view on the Financial crisis and how the current administration have sought to alleviate the problem?
Added to this is the question on every US citizen's mind, being can he pull the US economy round via an Obama feel-good factor alone or will in need a further stimulus package? And that is without any Foreign Policy considerations. Could be an interesting 10 weeks.
The US economic back-drop is not a pretty picture at present with the car market the focus â¦. Yesterday's news that US auto sales plummeted by 32% in October to its lowest monthly total since January 1991 provoked increased calls for new Federal Aid for the industry.
The present sales annual rate of 10.7 million unit is way below the break-even number of 16.2 million, and still falling. Something needs to be done to revive the consumer's confidence in the immediate future to get them back spending.
Ahead of the MPC meeting today/tomorrow we have had mixed signals from the economy, but most of them still negative.
While the mechanical effects of the big drop in energy and food prices seem likely to push the headline down below the rate of increase of the core very quickly, core CPI has been accelerating: Prices ex-food, -energy, -alcohol and âtobacco were 2.2% higher than a year ago in the latest report, almost double their yearly rate of increase in the first quarter.
This will obviously be a major discussion point for the MPC who must decide whether they are confident enough that ALL inflation risks have been contained and that price expectations are sufficiently well contained.
KPMG/REC reported the fastest falls in appointments and advertised vacancies in the history of their employment survey.The survey indicated that pay had shown the first fall in five years, with permanent pay falling to a reading of 45.7 from 50.0 in September and temporary pay falling to 47.0 from 50.4 in September.
The survey provides a very strong signal that UK unemployment is set to rise significantly in the next few months and into 2009, and earnings growth will be weak.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Labels: falling interest rates, interest rates, Loan calculator, MPC
# posted by Dr Search- Principal Consultant at the Search Clinic @ 10:01 AM 0 comments
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Tuesday, November 04, 2008
US elections- Obama?
The real problem for the US and hence the global economy is that as well as electing a new President, the US populace will also be voting for a new Congress.
This puts any real decisions from the US authorities on ice until full changeover in January. This means that the G-20 summit on 15th November being hosted by George Bush will prove largely to be a waste of time assuming that the US must be the biggest stakeholder in any resolution to the global economic meltdown.
At least the invited Heads of State will get to meet the incoming President who will be invited to attend.
The Dollar appears very resilient to bad news for the moment with the Market appearing to anticipate a swift move towards recovery on Barack Obama's perceived victory today/tomorrow. Yesterday's ISM gauge of US manufacturing activity in October dropped at its fastest rate for 25 years, a larger than expected fall, yet the Dollar firmed towards European close.
The UK number on the other hand was better than had been anticipated but the sickly pound was still very much confined to intensive care. This Sterling trait is worrying in so far as if good news isn't going to strengthen it, then against a background of aggressive rate cuts by the MPC, what will?
This last point seems to be the crux of the problem, with UK rates being higher than those of its peer group of economies meaning that Mervyn King will be able to cut more aggressively and for a longer time period than others. This will leave Sterling vulnerable to a prolonged period of weakness, especially against the US Dollar.
Money market rates continue to drift ever so slowly lower in Dollars and Euro with US LIBORs yesterday being fixed at their lowest level since the Lehmans failure.
Sterling rates however remain stubbornly high with the over-riding question for the global environment being magnified in the UK, - How does the Government get the Banks to start writing loans again without forcing them into imprudent lending? With the major UK Banks still jostling for Capital acquisition, this will be a sticking point for a while yet.
The Australians meanwhile, cut their interest rates by a further 0.75% today (against expectations of only 0.50) following their surprise 100 point cut last month.
This solely to prevent a total seizure of the Australian economy. The Yen strengthened on this move with Japan, as Australia's largest trading partner, deemed to be the major beneficiary of any upturn in the Aussie economy.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
This puts any real decisions from the US authorities on ice until full changeover in January. This means that the G-20 summit on 15th November being hosted by George Bush will prove largely to be a waste of time assuming that the US must be the biggest stakeholder in any resolution to the global economic meltdown.
At least the invited Heads of State will get to meet the incoming President who will be invited to attend.
The Dollar appears very resilient to bad news for the moment with the Market appearing to anticipate a swift move towards recovery on Barack Obama's perceived victory today/tomorrow. Yesterday's ISM gauge of US manufacturing activity in October dropped at its fastest rate for 25 years, a larger than expected fall, yet the Dollar firmed towards European close.
The UK number on the other hand was better than had been anticipated but the sickly pound was still very much confined to intensive care. This Sterling trait is worrying in so far as if good news isn't going to strengthen it, then against a background of aggressive rate cuts by the MPC, what will?
This last point seems to be the crux of the problem, with UK rates being higher than those of its peer group of economies meaning that Mervyn King will be able to cut more aggressively and for a longer time period than others. This will leave Sterling vulnerable to a prolonged period of weakness, especially against the US Dollar.
Money market rates continue to drift ever so slowly lower in Dollars and Euro with US LIBORs yesterday being fixed at their lowest level since the Lehmans failure.
Sterling rates however remain stubbornly high with the over-riding question for the global environment being magnified in the UK, - How does the Government get the Banks to start writing loans again without forcing them into imprudent lending? With the major UK Banks still jostling for Capital acquisition, this will be a sticking point for a while yet.
The Australians meanwhile, cut their interest rates by a further 0.75% today (against expectations of only 0.50) following their surprise 100 point cut last month.
This solely to prevent a total seizure of the Australian economy. The Yen strengthened on this move with Japan, as Australia's largest trading partner, deemed to be the major beneficiary of any upturn in the Aussie economy.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Labels: falling interest rates, interest rates, US loans rates
# posted by Dr Search- Principal Consultant at the Search Clinic @ 10:06 AM 0 comments
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Monday, December 03, 2007
Loans interest rates helped by equity rises
Rises in equity prices, with Wall Street well inside positive territory, helped boost the currency converters alongside month end book squaring activities, even though the afternoon's US data was at best mixed.
For one, US personal income and spending data rose more slowly than expected, suggesting that consumer spending may cool off quickly.
At the same time, however, there was more evidence of rising inflationary pressures, with the personal consumption expenditure (PCE) index growing to its highest level this year due to rises in food and energy costs
US rate cuts are expected to keep the economy from slipping into a recession and are seen by some as a positive for the dollar just now. As risk aversion begins to dissipate, the yen and Swiss franc are coming under pressure with the reemergence of carry trades.
Speaking on Friday, Federal Reserve chairman Ben Bernanke signalled more openness to cutting rates again on December 11, although he stressed this would be dependent on upcoming data.
Fed policymakers will need to be exceptionally alert and flexible given the risks to consumer spending and the economy, Bernanke said in a speech overnight. Among Fridays other US data, the Chicago purchasing managers' index was stronger than expected, rising to 52.9 in November from 49.7 in October while US construction spending was weaker than predicted.
Separately, month end book squaring also went in favour of the greenback, especially as this is the financial year end for US investment banks
In Europe, the boost for the euro from strong inflation numbers faded slightly as the trading day wore on. The single currency rose after stronger-than-expected inflation figures continued to suggest that the European Central Bank will leave interest rates on hold for the foreseeable future.
The provisional estimate for the euro zone harmonised index of consumer prices showed inflation rose to an annual 3.0 % in November, up from 2.6 % in October and above forecasts for 2.9 %.
With the headline rate likely to head even higher over the coming months, the ECB will remain in a state of high alert for signs of a wider pick-up in price pressures. This was confirmed by ECB president Jean-Claude Trichet, as he reiterated that the central bank's prime concern is to tackle price stability.
Higher inflation will leave the ECB facing a dilemma, giving them little chance to cut interest rates to counteract a slowing economy. The risks to the economy were highlighted on Friday by woeful German retail sales figures, which revealed an unexpected slump in sales of 3.3 % in real terms during October.
Trading remains subdued and rangebound, however, with the euro making up little ground against the dollar after the US currency gained from a pick-up in risk appetite.
The Bank of England's Monetary Policy Committee meets this week and analysts see some chance that they will opt to cut interest rates, though worries over inflationary pressures may well encourage them to hold off until early next year.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
For one, US personal income and spending data rose more slowly than expected, suggesting that consumer spending may cool off quickly.
At the same time, however, there was more evidence of rising inflationary pressures, with the personal consumption expenditure (PCE) index growing to its highest level this year due to rises in food and energy costs
US rate cuts are expected to keep the economy from slipping into a recession and are seen by some as a positive for the dollar just now. As risk aversion begins to dissipate, the yen and Swiss franc are coming under pressure with the reemergence of carry trades.
Speaking on Friday, Federal Reserve chairman Ben Bernanke signalled more openness to cutting rates again on December 11, although he stressed this would be dependent on upcoming data.
Fed policymakers will need to be exceptionally alert and flexible given the risks to consumer spending and the economy, Bernanke said in a speech overnight. Among Fridays other US data, the Chicago purchasing managers' index was stronger than expected, rising to 52.9 in November from 49.7 in October while US construction spending was weaker than predicted.
Separately, month end book squaring also went in favour of the greenback, especially as this is the financial year end for US investment banks
In Europe, the boost for the euro from strong inflation numbers faded slightly as the trading day wore on. The single currency rose after stronger-than-expected inflation figures continued to suggest that the European Central Bank will leave interest rates on hold for the foreseeable future.
The provisional estimate for the euro zone harmonised index of consumer prices showed inflation rose to an annual 3.0 % in November, up from 2.6 % in October and above forecasts for 2.9 %.
With the headline rate likely to head even higher over the coming months, the ECB will remain in a state of high alert for signs of a wider pick-up in price pressures. This was confirmed by ECB president Jean-Claude Trichet, as he reiterated that the central bank's prime concern is to tackle price stability.
Higher inflation will leave the ECB facing a dilemma, giving them little chance to cut interest rates to counteract a slowing economy. The risks to the economy were highlighted on Friday by woeful German retail sales figures, which revealed an unexpected slump in sales of 3.3 % in real terms during October.
Trading remains subdued and rangebound, however, with the euro making up little ground against the dollar after the US currency gained from a pick-up in risk appetite.
The Bank of England's Monetary Policy Committee meets this week and analysts see some chance that they will opt to cut interest rates, though worries over inflationary pressures may well encourage them to hold off until early next year.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.
Labels: Bank of England, FED, inflation, interest rates
# posted by Dr Search- Principal Consultant at the Search Clinic @ 10:45 AM 0 comments
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Wednesday, October 17, 2007
US data leads to mortgage calculator worries
The loans markets came off its day highs after data showed the summer's financial market turmoil led to the largest ever monthly outflow of capital from the US during August, as investors rushed to pull their money out of dollar denominated assets.
Treasury International Capital figures showed net foreign long-term securities purchases amounted to minus 69.3 bln usd in August, the largest outflow ever following three months of declining capital inflows.
The figure should bounce back next month when the market turmoil has died down. However, the fact that so many people shifted out of dollar-denominated assets is likely to weigh on the currency going forward. The data will not take away from the bearish mood surrounding the dollar – it is very posible that it could depreciate further in coming months.
US industrial production figures out yesterday afternoon, however, had little impact on the dollar, with output rising 0.1 % during September compared to August, in-line with expectations.
Meanwhile a dip in risk appetite, precipitated by poor US corporate earnings reports weighing on equities, political tension between the US and Turkey and rising oil prices has helped support the yen and weighed on the Australian dollar.
This is because of an unwind of the carry trade, a risky strategy where investors sell low-yielding currencies such as the yen to invest in high-yielding ones elsewhere such as the Australian currency.
The Office for National Statistics said the annual CPI inflation rate remained at 1.8 % in September, the same rate as in August, against expectations for a slight rise to 1.9 %. This means CPI has fallen below the BoE's 2.0 % target rate for three months running and has weighed on the sterling because it raises expectations that UK interest rates could be cut before the end of this year.
Today sees the release of the minutes to the Bank of England's October interest rate decision when borrowing costs were left on hold at 5.75 %. Markets will be watching closely for any signs that members of the Monetary Policy Committee are becoming more inclined towards cutting interest rates.
In keeping its benchmark overnight interest rate target unchanged for a second consecutive decision date at 4.50%, the Bank of Canada conformed with market expectations, even if its accompanying statement struck many as being slightly on the dovish side and suggestive of the Bank's next move being an eventual rate cut.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and debt consolidation.
Treasury International Capital figures showed net foreign long-term securities purchases amounted to minus 69.3 bln usd in August, the largest outflow ever following three months of declining capital inflows.
The figure should bounce back next month when the market turmoil has died down. However, the fact that so many people shifted out of dollar-denominated assets is likely to weigh on the currency going forward. The data will not take away from the bearish mood surrounding the dollar – it is very posible that it could depreciate further in coming months.
US industrial production figures out yesterday afternoon, however, had little impact on the dollar, with output rising 0.1 % during September compared to August, in-line with expectations.
Meanwhile a dip in risk appetite, precipitated by poor US corporate earnings reports weighing on equities, political tension between the US and Turkey and rising oil prices has helped support the yen and weighed on the Australian dollar.
This is because of an unwind of the carry trade, a risky strategy where investors sell low-yielding currencies such as the yen to invest in high-yielding ones elsewhere such as the Australian currency.
The Office for National Statistics said the annual CPI inflation rate remained at 1.8 % in September, the same rate as in August, against expectations for a slight rise to 1.9 %. This means CPI has fallen below the BoE's 2.0 % target rate for three months running and has weighed on the sterling because it raises expectations that UK interest rates could be cut before the end of this year.
Today sees the release of the minutes to the Bank of England's October interest rate decision when borrowing costs were left on hold at 5.75 %. Markets will be watching closely for any signs that members of the Monetary Policy Committee are becoming more inclined towards cutting interest rates.
In keeping its benchmark overnight interest rate target unchanged for a second consecutive decision date at 4.50%, the Bank of Canada conformed with market expectations, even if its accompanying statement struck many as being slightly on the dovish side and suggestive of the Bank's next move being an eventual rate cut.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and debt consolidation.
Labels: carry trade, interest rates, US mortgage rates
# posted by Dr Search- Principal Consultant at the Search Clinic @ 12:54 PM 0 comments
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Monday, October 15, 2007
Prices the word of the loans week
And that's not just for the rugby world cup final tickets.
The Rightmove House Price survey released this morning indicated September house prices recovered from a -2.6% decline previously to rise 2.7% last month. Year on year growth is now 10.4%.
The increase is due to more expensive homes on the market prior to the implementation of Home Information Packs. In signs that the market may be cooling the average time homes stay on the market continues to increase, now at five year highs of 85 days.
The week ahead also sees a raft of inflation data starting with UK inflation data tomorrow with expectations of an increase in the consumer price index from 1.8% to 1.9% primarily due to increasing food prices.
Eurozone inflation data for September is also due tomorrow again expectations are for no change at 2.1%.
US core inflation is due on Wednesday with the consensus also unmoved at 2.1%. Friday saw US retail sales results come in higher than forecast increasing 0.6%. This was against forecasts of 0.2% increase as consumers continued spending despite the deepening of the housing slump.
The above consensus of stable inflation data may undermine those hoping for interest rate cuts in the near future, the week ahead will provide greater indications of this.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and debt consolidation.
The Rightmove House Price survey released this morning indicated September house prices recovered from a -2.6% decline previously to rise 2.7% last month. Year on year growth is now 10.4%.
The increase is due to more expensive homes on the market prior to the implementation of Home Information Packs. In signs that the market may be cooling the average time homes stay on the market continues to increase, now at five year highs of 85 days.
The week ahead also sees a raft of inflation data starting with UK inflation data tomorrow with expectations of an increase in the consumer price index from 1.8% to 1.9% primarily due to increasing food prices.
Eurozone inflation data for September is also due tomorrow again expectations are for no change at 2.1%.
US core inflation is due on Wednesday with the consensus also unmoved at 2.1%. Friday saw US retail sales results come in higher than forecast increasing 0.6%. This was against forecasts of 0.2% increase as consumers continued spending despite the deepening of the housing slump.
The above consensus of stable inflation data may undermine those hoping for interest rate cuts in the near future, the week ahead will provide greater indications of this.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and debt consolidation.
Labels: inflation, interest rates
# posted by Dr Search- Principal Consultant at the Search Clinic @ 2:29 PM 0 comments
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Thursday, October 11, 2007
Bank of Japan keeps interest rates on hold
The mortgage rates lenders traded in a narrow range until the announcement last night that the Bank of Japan kept its interest rates on hold. Today the yen has lost ground to the dollar and euro.
Other currencies such as the Australian and New Zealand dollars, the Norwegian krone and the South African rand have rallied strongly against the yen since mid-August.
Links to commodity prices such as gold and the anti-inflationary positions of the respective central banks are viewed as important attractions for these currency pairs.
Whilst tighter lending conditions could produce a further credit squeeze, the sentiment from the BOE is that Britain's economy needs to slow over 2008 to stem inflation. On Tuesday, Darling downgraded the government's economic forecasts citing the problems stemming from the U.S. economy.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and debt consolidation.
Other currencies such as the Australian and New Zealand dollars, the Norwegian krone and the South African rand have rallied strongly against the yen since mid-August.
Links to commodity prices such as gold and the anti-inflationary positions of the respective central banks are viewed as important attractions for these currency pairs.
Whilst tighter lending conditions could produce a further credit squeeze, the sentiment from the BOE is that Britain's economy needs to slow over 2008 to stem inflation. On Tuesday, Darling downgraded the government's economic forecasts citing the problems stemming from the U.S. economy.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and debt consolidation.
Labels: Bank of Japan, interest rates
# posted by Dr Search- Principal Consultant at the Search Clinic @ 10:04 AM 0 comments
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Thursday, September 27, 2007
Weak US data continues to dominate loans headlines
Durable goods orders in the world's largest economy came in far below expectations, dropping 4.9 % in August, and by 1.8 % excluding transportation goods, compared with forecasts for declines of 3.1 % and 1.2 % respectively.
The August orders report looks weak at first blush. But the decline should not be too much of a surprise, especially in view of the unsustainable upward spikes in machinery and motor vehicles orders in July. The order backlog still remains solid, and shipments moved up by 0.8 % in August, suggesting that business equipment and software investment is still on track to make some positive contribution to third quarter growth.
The loans market will look to today’s GDP and new home sales data to provide further signs on how the US economy is performing after the summer's turbulence. The final GDP number for the second quarter is expected to be revised down slightly to 3.9 % from the initial 4.0 % reading. New home sales for August are expected to fall to an annual rate of 830,000, down from 870,000 the prior month.
Meanwhile, the pound fell back as anxiety resurged over a Bank of England report that showed lenders expect credit conditions for businesses to tighten further in the next three months. The pound was also pressured by growing speculation that the BoE's next move in its monetary policy will likely be to cut interest rates in the face of this growing risk.
We do believe there is a high probability that interest rates will fall sharply over the next 12 months as the BoE attempts to fend off any further potential fallouts from the current credit market turmoil.
Yesterday the markets got a mild boost after it emerged that the Bank of England's auction of 10 bln stg worth of emergency funds, at an interest rate of 6.75 %, was completely ignored by commercial banks.
Analysts had expected scant take-up of the auction because the Libor rate has been falling sharply in recent days, as banks become more willing to lend to each other again. The zero-bid result, however, came as a surprise and helped offset earlier sterling weakness, which followed a BoE report that showed lenders expect credit conditions for businesses to tighten further in the next three months.
The prospect of more expensive, less available credit increases the downside risks to business confidence, investment and employment over the coming months, and is likely to increase expectations that the BoE could trim its benchmark interest rate before the end of the year.
Earlier, the European Central Bank injected 50 bln eur into money markets via a longer-term refinancing operation. This compares with 75 bln eur leaving the market on the expiry of a previous longer-term refi.
Elsewhere, Norway's central bank raised its benchmark rate for the sixth time this year to 5%, following rate increases earlier this month by Switzerland and Sweden.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and debt consolidation.
The August orders report looks weak at first blush. But the decline should not be too much of a surprise, especially in view of the unsustainable upward spikes in machinery and motor vehicles orders in July. The order backlog still remains solid, and shipments moved up by 0.8 % in August, suggesting that business equipment and software investment is still on track to make some positive contribution to third quarter growth.
The loans market will look to today’s GDP and new home sales data to provide further signs on how the US economy is performing after the summer's turbulence. The final GDP number for the second quarter is expected to be revised down slightly to 3.9 % from the initial 4.0 % reading. New home sales for August are expected to fall to an annual rate of 830,000, down from 870,000 the prior month.
Meanwhile, the pound fell back as anxiety resurged over a Bank of England report that showed lenders expect credit conditions for businesses to tighten further in the next three months. The pound was also pressured by growing speculation that the BoE's next move in its monetary policy will likely be to cut interest rates in the face of this growing risk.
We do believe there is a high probability that interest rates will fall sharply over the next 12 months as the BoE attempts to fend off any further potential fallouts from the current credit market turmoil.
Yesterday the markets got a mild boost after it emerged that the Bank of England's auction of 10 bln stg worth of emergency funds, at an interest rate of 6.75 %, was completely ignored by commercial banks.
Analysts had expected scant take-up of the auction because the Libor rate has been falling sharply in recent days, as banks become more willing to lend to each other again. The zero-bid result, however, came as a surprise and helped offset earlier sterling weakness, which followed a BoE report that showed lenders expect credit conditions for businesses to tighten further in the next three months.
The prospect of more expensive, less available credit increases the downside risks to business confidence, investment and employment over the coming months, and is likely to increase expectations that the BoE could trim its benchmark interest rate before the end of the year.
Earlier, the European Central Bank injected 50 bln eur into money markets via a longer-term refinancing operation. This compares with 75 bln eur leaving the market on the expiry of a previous longer-term refi.
Elsewhere, Norway's central bank raised its benchmark rate for the sixth time this year to 5%, following rate increases earlier this month by Switzerland and Sweden.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and debt consolidation.
Labels: Bank of England, interest rates
# posted by Dr Search- Principal Consultant at the Search Clinic @ 10:18 AM 0 comments
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Monday, September 24, 2007
US loans markets remain the focus
The loans calculators market's main focus remains the US, and this week's event risk remains high for the US currency. The economic data flow picks up, albeit that the market's attention will still firmly rest on conditions in the credit markets, liquidity issues and the stronger euro.
Indeed, with the global focus still on US growth concerns, it remains difficult to expect the euro to soften over the week ahead even though the euro zone economic releases are likely to be on the soft side.
Until August, the European Central Bank could afford to lean back and let the rising euro do some of the monetary tightening for the ECB, however, the turmoil in financial markets, the heightened uncertainty about the growth outlook and intense political pressure have changed the situation. The current surge in the euro to a new record high is a serious issue for the ECB.
Though ECB president Jean-Claude Trichet has stressed the bank's independence in all economic matters, complaints from politicians have already begun.
Speaking on French television, French President Nicolas Sarkozy continued to criticise the ECB's rate tightening bias and called for increased consultation with politicians on monetary policy.
Elsewhere, the Canadian dollar broke parity against the US dollar, reversing earlier losses stemming from weak Canadian retail sales figures, as oil prices hit another fresh record high.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and debt consolidation.
Indeed, with the global focus still on US growth concerns, it remains difficult to expect the euro to soften over the week ahead even though the euro zone economic releases are likely to be on the soft side.
Until August, the European Central Bank could afford to lean back and let the rising euro do some of the monetary tightening for the ECB, however, the turmoil in financial markets, the heightened uncertainty about the growth outlook and intense political pressure have changed the situation. The current surge in the euro to a new record high is a serious issue for the ECB.
Though ECB president Jean-Claude Trichet has stressed the bank's independence in all economic matters, complaints from politicians have already begun.
Speaking on French television, French President Nicolas Sarkozy continued to criticise the ECB's rate tightening bias and called for increased consultation with politicians on monetary policy.
Elsewhere, the Canadian dollar broke parity against the US dollar, reversing earlier losses stemming from weak Canadian retail sales figures, as oil prices hit another fresh record high.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and debt consolidation.
Labels: interest rates, Loan calculator, sub prime loans
# posted by Dr Search- Principal Consultant at the Search Clinic @ 10:57 AM 0 comments
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Friday, September 21, 2007
Loans credit crunch has further to go
Lenders worried about Fed Chief Ben Bernanke's words that the fallout in the US sub-prime market will continue. Delinquencies and foreclosures in the sub-prime mortgage market are likely to rise further, Federal Reserve Chairman Ben Bernanke warned a Congressional hearing yesterday.
His comments offset any benefit for the dollar from a more upbeat US Treasury Secretary Henry Paulson, who continued to downplay the credit crisis, telling members of Congress that the US is poised for continued economic growth.
Many analysts predict that US rate setters will have to reduce interest rates again to keep US growth on track.
Elsewhere, the pound recovered moderately after strong UK retail sales data and a better-than-expected manufacturing survey decreased the likelihood that the Bank of England will cut interest rates soon.
The Office for National Statistics reported that retail sales in August rose 0.6 % on the month, just below July's 0.7 % gain but well above analysts' forecasts for a 0.1 % rise.
Meanwhile, there was further good news on the manufacturing sector from a better-than-expected survey from the Confederation of British Industry, while data showing strong money supply growth will make it even more difficult for the Bank to justify cutting interest rates.
Focus yesterday, however, centred on Bank of England governor Mervyn King's testimony before MPs on the Treasury Select Committee where he was grilled on the central bank's much criticised response to the Northern Rock crisis.
Rumours had been circulating that King could be forced to resign over the issue, but in the event King was seen as giving a good account of himself as he shifted the blame onto legislation, especially the Market Abuses Directive, which prevented his 'preferred' measure of using a covert lender of last resort operation.
Some analysts found comfort in King's assertion that the central bank will not be taking short-term options.
Comments from other rate setters at yesterdays hearing also appeared to indicate support for King's view. Kate Barker, the resident housing expert, said UK mortgage repossessions are 'not alarming'' despite recent rises in defaults, adding the housing market remains 'relatively robust.'
Finally, The Canadian dollar reached parity with the U.S. dollar yesterday for the first time since November 1976. This week the CAD rose sharply against its U.S. counterpart after the Federal Reserve announced a dramatic half-point cut in its benchmark interest rates.
The Bank of Canada, meanwhile, has kept its equivalent rates stable. As a result, the spread between U.S. and Canadian interest rates widened, making Canada a more attractive place for German, Japanese, American and other foreign investors to put their money.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and debt consolidation.
His comments offset any benefit for the dollar from a more upbeat US Treasury Secretary Henry Paulson, who continued to downplay the credit crisis, telling members of Congress that the US is poised for continued economic growth.
Many analysts predict that US rate setters will have to reduce interest rates again to keep US growth on track.
Elsewhere, the pound recovered moderately after strong UK retail sales data and a better-than-expected manufacturing survey decreased the likelihood that the Bank of England will cut interest rates soon.
The Office for National Statistics reported that retail sales in August rose 0.6 % on the month, just below July's 0.7 % gain but well above analysts' forecasts for a 0.1 % rise.
Meanwhile, there was further good news on the manufacturing sector from a better-than-expected survey from the Confederation of British Industry, while data showing strong money supply growth will make it even more difficult for the Bank to justify cutting interest rates.
Focus yesterday, however, centred on Bank of England governor Mervyn King's testimony before MPs on the Treasury Select Committee where he was grilled on the central bank's much criticised response to the Northern Rock crisis.
Rumours had been circulating that King could be forced to resign over the issue, but in the event King was seen as giving a good account of himself as he shifted the blame onto legislation, especially the Market Abuses Directive, which prevented his 'preferred' measure of using a covert lender of last resort operation.
Some analysts found comfort in King's assertion that the central bank will not be taking short-term options.
Comments from other rate setters at yesterdays hearing also appeared to indicate support for King's view. Kate Barker, the resident housing expert, said UK mortgage repossessions are 'not alarming'' despite recent rises in defaults, adding the housing market remains 'relatively robust.'
Finally, The Canadian dollar reached parity with the U.S. dollar yesterday for the first time since November 1976. This week the CAD rose sharply against its U.S. counterpart after the Federal Reserve announced a dramatic half-point cut in its benchmark interest rates.
The Bank of Canada, meanwhile, has kept its equivalent rates stable. As a result, the spread between U.S. and Canadian interest rates widened, making Canada a more attractive place for German, Japanese, American and other foreign investors to put their money.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and debt consolidation.
Labels: credit crunch, interest rates
# posted by Dr Search- Principal Consultant at the Search Clinic @ 8:32 AM 0 comments
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Thursday, August 23, 2007
Loan calculator sees Euro interest rate rises
The European Central Bank gave a clear hint that it is still on course to raise borrowing costs next month despite the recent turmoil in the financial markets.
In a statement, the ECB confirmed yesterday that its monetary policy stance has not changed from earlier in the month when the bank's chief Jean Claude Trichet reinforced expectations of another quarter point increase in the key refi rate to 4.25 %.
His use of the code words 'strong vigilance' on August 2 was widely seen as a precursor for a rate hike. Since then, however, the troubles in the US subprime market have led to steep falls in markets around the world, and in turn leading to some doubt whether the ECB will indeed continue hiking interest rates.
As this phrase has been used to signal every rate hike in the recent cycle, this supports our view that the ECB is likely to make good its promise for a September hike. Indeed, if growth rebounds in the coming months as the surveys suggest, another hike in December, to 4.50 % is still a possibility.
While the ECB is poised to raise interest rates, the US Federal Reserve could be on course for a rate cut.
The Fed's chairman Ben Bernanke said on Tuesday that he was 'absolutely' prepared to use all the tools at his disposal to address the credit crisis in the US financial system, according to Senator Chris Dodd, chairman of the Senate banking committee. Dodd reported Bernanke's comments to the press after a closed-door meeting with Bernanke and Treasury Secretary Henry Paulson.
Elsewhere, the pound was buoyed by a much stronger than expected survey on the UK manufacturing sector.
The Confederation of British Industry revealed that a balance of +9 % of firms polled reported that their order books were above normal in August - the highest level for more than 12 years.
An imminent rate hike from the Bank of England is not expected after last week's news that annual CPI inflation dropped below the 2.0 % target to 1.9 % in July from 2.4 % in June.
Still, a return to calmer conditions in financial markets in the near-term combined with a likely acceleration in CPI inflation in Q4, due to base effects from the large decline in oil prices late last year, could still see the BoE raise rates one final time to 6.00 % by year end.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and debt consolidation.Labels: ECB, FED, interest rates
# posted by Dr Search- Principal Consultant at the Search Clinic @ 9:14 AM 0 comments
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Tuesday, March 27, 2007
New homes sales weaken loans markets
The US refinancing market has started the week under pressure following weaker than expected New Home Sales figures for February. Lenders had received a boost towards the end of last week when Existing Home Sales figures came in above consensus.
The mixed housing data only adds to the confusion surrounding the state of the US economy which we highlighted in yesterday’s posting.
Many analysts had predicted an increase in sales of new homes, especially in light of the encouraging release last Friday and the warmer weather setting in. The general opinion was for a rise of about 3.5% to 970,000.
Economists were therefore shocked to see the figure come in at just 848,000, a fall of nearly 4% and the weakest performance in this sector for nearly 7 years. Compounding the misery was the year-on-year picture – data from February 2006 was 18.3% stronger – and the downward revision by 170,000 of the previous 3 month’s numbers.
Given the mixed signals about whether the Federal Reserve’s next move in interest rates will be up or down, the markets were hardly in a position to absorb such shocks. The negative sentiment surrounding the interest rates now leaves them vulnerable to releases later in the week.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and debt consolidation.
The mixed housing data only adds to the confusion surrounding the state of the US economy which we highlighted in yesterday’s posting.
Many analysts had predicted an increase in sales of new homes, especially in light of the encouraging release last Friday and the warmer weather setting in. The general opinion was for a rise of about 3.5% to 970,000.
Economists were therefore shocked to see the figure come in at just 848,000, a fall of nearly 4% and the weakest performance in this sector for nearly 7 years. Compounding the misery was the year-on-year picture – data from February 2006 was 18.3% stronger – and the downward revision by 170,000 of the previous 3 month’s numbers.
Given the mixed signals about whether the Federal Reserve’s next move in interest rates will be up or down, the markets were hardly in a position to absorb such shocks. The negative sentiment surrounding the interest rates now leaves them vulnerable to releases later in the week.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and debt consolidation.
Labels: interest rates, new home sales
# posted by Dr Search- Principal Consultant at the Search Clinic @ 1:36 PM 0 comments
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Monday, March 26, 2007
Loans markets look for direction in data filled week
A slew of economic data, heavily loaded towards the back end of the week, might not be enough to give traders a clear indication of the direction and timing of monetary policy in the major economies.
Despite the huge volume of data this week, the lack of influence of any one particular piece of news could see continued uncertainty on the exchanges leading into the first week of April. Direction next week will be influenced by a few key events, including the Bank of England’s Interest Rate announcement and the US Non Farm Payrolls.
Uncertainty about future interest rate movements in the world’s largest economy continues to surround the US Dollar. It is hard to remember a time in recent monetary policy history when the view has been more divided.
A lack of hawkish rhetoric (no mention of ‘additional firming’) at the latest Fed statement was one reason for the recent Dollar sell off and the Pound and the Euro rose towards the highs of recent ranges against the Greenback last week.
However, the US economic variables are not entirely balanced at the moment – signs of an economic slowdown have not really fed through into an easing of price pressures. Subsequently those economists calling for Fed cuts are matched in number by those wanting to remain cautious on inflation.
US New home sales for February (Today; 3pm) and US Consumer Confidence for March (Tuesday; 3pm) are the most likely market movers at the start of the week.
Prospects for another interest rate increase in the UK remain strong even if the timing of such a move is still up for debate. The major gauges (such as Consumer Price Inflation) used by the Bank of England’s 9-strong committee have been and gone.
The Nationwide house prices survey, due for release on Friday, will be watched to see if there are any early signs of a housing market slowdown in the UK. However, the MPC are unlikely to act until definite longer-term trends emerge in this sector.
The major news in the Eurozone will come, as usual, from Germany. The IFO Business climate survey is due for release on Tuesday at 9am and Unemployment for March is out on Thursday morning.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and debt consolidation.
Despite the huge volume of data this week, the lack of influence of any one particular piece of news could see continued uncertainty on the exchanges leading into the first week of April. Direction next week will be influenced by a few key events, including the Bank of England’s Interest Rate announcement and the US Non Farm Payrolls.
Uncertainty about future interest rate movements in the world’s largest economy continues to surround the US Dollar. It is hard to remember a time in recent monetary policy history when the view has been more divided.
A lack of hawkish rhetoric (no mention of ‘additional firming’) at the latest Fed statement was one reason for the recent Dollar sell off and the Pound and the Euro rose towards the highs of recent ranges against the Greenback last week.
However, the US economic variables are not entirely balanced at the moment – signs of an economic slowdown have not really fed through into an easing of price pressures. Subsequently those economists calling for Fed cuts are matched in number by those wanting to remain cautious on inflation.
US New home sales for February (Today; 3pm) and US Consumer Confidence for March (Tuesday; 3pm) are the most likely market movers at the start of the week.
Prospects for another interest rate increase in the UK remain strong even if the timing of such a move is still up for debate. The major gauges (such as Consumer Price Inflation) used by the Bank of England’s 9-strong committee have been and gone.
The Nationwide house prices survey, due for release on Friday, will be watched to see if there are any early signs of a housing market slowdown in the UK. However, the MPC are unlikely to act until definite longer-term trends emerge in this sector.
The major news in the Eurozone will come, as usual, from Germany. The IFO Business climate survey is due for release on Tuesday at 9am and Unemployment for March is out on Thursday morning.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and debt consolidation.
Labels: Bank of England, interest rates, Loan calculator
# posted by Dr Search- Principal Consultant at the Search Clinic @ 7:26 PM 0 comments
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Friday, March 23, 2007
Wall St consolidates gains
Hints that the Federal Reserve was no longer biased towards raising interest rates sparked a strong rally on Wall Street this week, raising investors’ hopes that the recent slump had run its course.
While the Federal Open Market Committee statement on Wednesday was carefully worded, stirring debate about its meaning, the equity market’s response was unequivocal.
The S&P 500 index bounced back into positive territory for the year with its biggest weekly rise in four years. The rally pushed the benchmark index above its 30-day moving average, an encouraging technical sign for bulls.
The S&P closed 0.1 per cent higher at 1,436.11, its fifth successive day of gains that put it up 3.5 per cent on the week. The Dow Jones Industrial Average rose 0.2 per cent on Friday to 12,481.01.
The recovery came as Blackstone, the buy-out group, prompted reflection on the recent private equity boom by filing for an initial public offering to raise $4bn.
Energy stocks made the biggest gains this week, buoyed by both rising oil prices and broad strength in equities. The S&P Energy index stands at its highest point since December, 17.3 per cent above its low for the year.
Exxon stock surged 7.4 per cent to $75.02 this week, while Chevron rose 8.3 per cent to $73.70. The odd one out in the sector was Halliburton, the oil services group, which slid 3.1 per cent to $31.08 after warning about weak US demand.
Homebuilders began to make headway on the back of sound housing data. Sales of existing homes and housing starts were both in excess of depressed expectations.
Concerns about tighter mortgage lending standards hitting demand for homes checked the gains. The S&P Homebuilders index rose 2.4 per cent this week, but remains more than 20 per cent off its high for the year.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and debt consolidation.
While the Federal Open Market Committee statement on Wednesday was carefully worded, stirring debate about its meaning, the equity market’s response was unequivocal.
The S&P 500 index bounced back into positive territory for the year with its biggest weekly rise in four years. The rally pushed the benchmark index above its 30-day moving average, an encouraging technical sign for bulls.
The S&P closed 0.1 per cent higher at 1,436.11, its fifth successive day of gains that put it up 3.5 per cent on the week. The Dow Jones Industrial Average rose 0.2 per cent on Friday to 12,481.01.
The recovery came as Blackstone, the buy-out group, prompted reflection on the recent private equity boom by filing for an initial public offering to raise $4bn.
Energy stocks made the biggest gains this week, buoyed by both rising oil prices and broad strength in equities. The S&P Energy index stands at its highest point since December, 17.3 per cent above its low for the year.
Exxon stock surged 7.4 per cent to $75.02 this week, while Chevron rose 8.3 per cent to $73.70. The odd one out in the sector was Halliburton, the oil services group, which slid 3.1 per cent to $31.08 after warning about weak US demand.
Homebuilders began to make headway on the back of sound housing data. Sales of existing homes and housing starts were both in excess of depressed expectations.
Concerns about tighter mortgage lending standards hitting demand for homes checked the gains. The S&P Homebuilders index rose 2.4 per cent this week, but remains more than 20 per cent off its high for the year.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and debt consolidation.
Labels: FED, FOMC, interest rates
# posted by Dr Search- Principal Consultant at the Search Clinic @ 10:08 AM 0 comments
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Thursday, March 22, 2007
Bank of England minutes surprise markets
The Bank of England minutes from the 8th March meeting released yesterday provided a surprise for the financial markets. Neither of the two hawks expected to vote for a rate increase did and one member, David Blanchflower actually voted for a rate cut.
With the other 8 members voting to leave rates on hold the “dovish” minute’s poured cold water on expectations of an interest rate rise in April or May. Speculation of a rate rise had grown after the above forecast inflation data earlier this week.
Initially Sterling lost some of its recent allure falling more than half a U.S cent although the underlying recent Dollar weakness helped it to recover over the course of the afternoon.
Whilst on the subject of Interest rates the U.S Federal Reserve after its two day meeting announced last night that it would hold Interest Rates at 5.25% and dropped a reference to possible further rate hikes in the post-meeting statement.
Although the Fed said after the meeting that inflation was still its main concern, investors took the change in the statement as a sign that a rate cut may be near and sold the dollar. There were no particular references to the sub-prime mortgage sector, which did come as a relief to markets as the Fed probably wished to indicate it did not see the current sub-prime problems as threatening to the economy
As a result of the U.S Federal Reserves announcement the USD again came under pressure. The Pound reversed all of its losses seen earlier in the day and the Euro rose to the highest point since March 2005 as markets expect more eurozone interest rate hikes this year from the current 3.75%.
U.K Retail Sales for February will be released this morning closely watched by the markets. The number contracted sharply in January -1.8% so expectations today are for a rebound of around 0.5% but it is thought the general trend over the next few months will remain one of a weakening retail sector.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and debt consolidation.
With the other 8 members voting to leave rates on hold the “dovish” minute’s poured cold water on expectations of an interest rate rise in April or May. Speculation of a rate rise had grown after the above forecast inflation data earlier this week.
Initially Sterling lost some of its recent allure falling more than half a U.S cent although the underlying recent Dollar weakness helped it to recover over the course of the afternoon.
Whilst on the subject of Interest rates the U.S Federal Reserve after its two day meeting announced last night that it would hold Interest Rates at 5.25% and dropped a reference to possible further rate hikes in the post-meeting statement.
Although the Fed said after the meeting that inflation was still its main concern, investors took the change in the statement as a sign that a rate cut may be near and sold the dollar. There were no particular references to the sub-prime mortgage sector, which did come as a relief to markets as the Fed probably wished to indicate it did not see the current sub-prime problems as threatening to the economy
As a result of the U.S Federal Reserves announcement the USD again came under pressure. The Pound reversed all of its losses seen earlier in the day and the Euro rose to the highest point since March 2005 as markets expect more eurozone interest rate hikes this year from the current 3.75%.
U.K Retail Sales for February will be released this morning closely watched by the markets. The number contracted sharply in January -1.8% so expectations today are for a rebound of around 0.5% but it is thought the general trend over the next few months will remain one of a weakening retail sector.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and debt consolidation.
Labels: Bank of England, FED, interest rates
# posted by Dr Search- Principal Consultant at the Search Clinic @ 10:06 AM 0 comments
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Monday, March 19, 2007
Interest Rates and inflation likely to dominate the week
The FOMC meeting on Wednesday and the accompanying statement are likely to be the focus for financial markets this week. Expectations remain for the Fed to leave rates on hold at 5.25% although some anticipate the statement may offer acknowledgement of softer growth and perhaps trouble in the sub prime lending sector.
On that note, this weeks U.S housing data on Tuesday & Friday, will be of particular interest in light of the recent focus on the faltering sub prime market.
In the UK a number of important releases are scheduled this week. Tomorrow the annual CPI Inflation is expected to fall slightly to 2.6% from the previous 2.7%. Wednesday sees the Bank of England minutes from the March meeting released, where most analysts are expecting no members voted for a hike.
Hopefully the minutes will shed some light on whether it is now a minority of members who feel the risks are consistently high enough to warrant a further hike this year. On Wednesday the Chancellor of the Exchequer will deliver his budget statement. Finally UK Retail Sales for February will be released on Thursday. After the January sharp fall this is forecast to rebound in the region of 0.8% putting the annual figure somewhere in the region of 4.0%
In Japan the Bank of Japan begin their two day meeting today and forecasts are unanimous that tomorrows outcome will leave the target rate on hold at 0.5%. This places the focus on Governor Fukui’s subsequent speech and the BoJ’s monthly report which will both be closely monitored for signals of future rate hikes.
For those with an interest in or an exposure to China the Peoples Bank of China announced a 27bp hike in both the benchmark lending and interbank deposit rates on Saturday. The move was widely expected after the PBoC Governor said CPI had become worryingly high.
In the short term the stock market may not react well to the hike, but on the currency front pressure on the CNY appreciation will probably intensify. This is now the third time the Central Bank has raised interest rates since last April.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and debt consolidation.
On that note, this weeks U.S housing data on Tuesday & Friday, will be of particular interest in light of the recent focus on the faltering sub prime market.
In the UK a number of important releases are scheduled this week. Tomorrow the annual CPI Inflation is expected to fall slightly to 2.6% from the previous 2.7%. Wednesday sees the Bank of England minutes from the March meeting released, where most analysts are expecting no members voted for a hike.
Hopefully the minutes will shed some light on whether it is now a minority of members who feel the risks are consistently high enough to warrant a further hike this year. On Wednesday the Chancellor of the Exchequer will deliver his budget statement. Finally UK Retail Sales for February will be released on Thursday. After the January sharp fall this is forecast to rebound in the region of 0.8% putting the annual figure somewhere in the region of 4.0%
In Japan the Bank of Japan begin their two day meeting today and forecasts are unanimous that tomorrows outcome will leave the target rate on hold at 0.5%. This places the focus on Governor Fukui’s subsequent speech and the BoJ’s monthly report which will both be closely monitored for signals of future rate hikes.
For those with an interest in or an exposure to China the Peoples Bank of China announced a 27bp hike in both the benchmark lending and interbank deposit rates on Saturday. The move was widely expected after the PBoC Governor said CPI had become worryingly high.
In the short term the stock market may not react well to the hike, but on the currency front pressure on the CNY appreciation will probably intensify. This is now the third time the Central Bank has raised interest rates since last April.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and debt consolidation.
Labels: Bank of England, FOMC, interest rates
# posted by Dr Search- Principal Consultant at the Search Clinic @ 9:37 AM 0 comments
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Friday, March 02, 2007
Nervy Markets on the slide again
Stronger that expected US economic data helping to stabilize the dollar and delay the market's expectations for an interest rate cut by the Federal Reserve.
Fed Fund futures though are pricing in a 100% chance of a quarter of a point rate cut by October. To the surprise of the market, personal income, personal spending, personal consumption expenditures and the ISM manufacturing survey all came out stronger than expected yesterday.
This week's Chicago PMI and Philly Fed index failed to correctly forecast the directional improvement in the ISM. The report seemed to indicate that inflation is ticking higher in certain parts of the US economy and may not be weakening as significantly as some people may have initially thought.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and debt consolidation.
Fed Fund futures though are pricing in a 100% chance of a quarter of a point rate cut by October. To the surprise of the market, personal income, personal spending, personal consumption expenditures and the ISM manufacturing survey all came out stronger than expected yesterday.
This week's Chicago PMI and Philly Fed index failed to correctly forecast the directional improvement in the ISM. The report seemed to indicate that inflation is ticking higher in certain parts of the US economy and may not be weakening as significantly as some people may have initially thought.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and debt consolidation.
Labels: FED, interest rates
# posted by Dr Search- Principal Consultant at the Search Clinic @ 12:17 PM 0 comments
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Monday, February 26, 2007
BoJ decision raises rates to 0.5 per cent
The bank of Japan voted 8-1 in favour of raising interest rates by 0.25 basis points to 0.5%. Toshihiko Fukui, BoJ governor, mentioned future rate rises would be very gradual and that they would be keeping monetary policy extremely accommodative.
In the Eurozone Friday's slightly lower than expected German IFO figure came in at 107.5 from an anticipated 107.5. In spite of that strong Eurozone growth data could provide the ECB with the necessary arguments to defend further interest rate hikes.
Iran, meanwhile, remained defiant on its pursuit of its nuclear programme by admitting it had fired a rocket into the atmosphere. President Mahmoud Ahmadi-Nejad was quoted saying Iran has obtained the technology to produce nuclear fuel and Iran’s move is like a train that has no brakes and no reverse gear.
Mr Ahmadi-Nejad’s comments were quickly picked up by Condoleezza Rice, US secretary of state. “They don’t need a reverse gear,” she responded on Fox News. “They need a stop button.”
This week is light on the data front but Trichet is speaking on Wednesday at 2pm which will be monitored to see if there will any indication on future rate rises.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and debt consolidation.
In the Eurozone Friday's slightly lower than expected German IFO figure came in at 107.5 from an anticipated 107.5. In spite of that strong Eurozone growth data could provide the ECB with the necessary arguments to defend further interest rate hikes.
Iran, meanwhile, remained defiant on its pursuit of its nuclear programme by admitting it had fired a rocket into the atmosphere. President Mahmoud Ahmadi-Nejad was quoted saying Iran has obtained the technology to produce nuclear fuel and Iran’s move is like a train that has no brakes and no reverse gear.
Mr Ahmadi-Nejad’s comments were quickly picked up by Condoleezza Rice, US secretary of state. “They don’t need a reverse gear,” she responded on Fox News. “They need a stop button.”
This week is light on the data front but Trichet is speaking on Wednesday at 2pm which will be monitored to see if there will any indication on future rate rises.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and debt consolidation.
Labels: Bank of Japan, interest rates
# posted by Dr Search- Principal Consultant at the Search Clinic @ 4:54 PM 0 comments
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Thursday, February 22, 2007
Bank of England hold rates at 5.25 per cent
Yesterday the minutes from the Bank of England’s February Monetary Policy Committee meeting revealed a 7 to 2 vote in favour of keeping UK interest rates on hold at 5.25 per cent. The seven members that voted for a rate hold felt concerned about delivering rate hikes that were too closely spaced together.
They wanted to give the economy time to absorb the latest rate hikes and also wanted to avoid over tightening. The minutes gave no clues on the timing of the next UK interest rate rise. However, the tone of the discussion was significantly more hawkish than that of the December MPC minutes, which preceded January’s surprise rate rise.
In the US consumer prices were slightly better than expected yesterday which helped to contribute to the overall strength of the USD. Having rallied going into the release of the CPI report, the true impact on the dollar was limited.
The minutes from the January FOMC meeting were relatively upbeat about growth and agreed that inflation risks still remain. Even though another rate hike was not justified at the time, they decided against dropping the tightening bias.
The tone of the statement contained the same degree of hawkishness as the comments made by Fed Chairman Bernanke last week, which should keep the prospects of a rate hike later this year in play.
The BoJ voted 8-to-1 in favour of raising increasing interest rates by 25 basis points to 0.5 %. Comments from the BoJ reinforced the market’s belief that despite the increase, interest rates will remain low and any further rate hikes will be delivered gradually.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and debt consolidation.
They wanted to give the economy time to absorb the latest rate hikes and also wanted to avoid over tightening. The minutes gave no clues on the timing of the next UK interest rate rise. However, the tone of the discussion was significantly more hawkish than that of the December MPC minutes, which preceded January’s surprise rate rise.
In the US consumer prices were slightly better than expected yesterday which helped to contribute to the overall strength of the USD. Having rallied going into the release of the CPI report, the true impact on the dollar was limited.
The minutes from the January FOMC meeting were relatively upbeat about growth and agreed that inflation risks still remain. Even though another rate hike was not justified at the time, they decided against dropping the tightening bias.
The tone of the statement contained the same degree of hawkishness as the comments made by Fed Chairman Bernanke last week, which should keep the prospects of a rate hike later this year in play.
The BoJ voted 8-to-1 in favour of raising increasing interest rates by 25 basis points to 0.5 %. Comments from the BoJ reinforced the market’s belief that despite the increase, interest rates will remain low and any further rate hikes will be delivered gradually.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and debt consolidation.
Labels: Bank of England, Bank of Japan, FED, interest rates
# posted by Dr Search- Principal Consultant at the Search Clinic @ 11:30 AM 0 comments
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Wednesday, February 21, 2007
All lenders eyes on the BoE minutes
Loans interest rates was stronger yesterday thanks to firm money supply and public finance data. M4 money supply grew by a healthy 13% in the month of January while net monthly lending hit a fresh record high.
Today’s release of the MPC minutes from the monetary policy meeting held earlier this month is the main data out this week. The question being is whether there is room for another interest rate hike after the surprise rate hike in January.
If the decision to leave rates unchanged was unanimous, then the odds for a rate hike in March will be very low. If at least 2 members voted in favour of a rate hike, then market expectations will quickly adjust to reflect the possibility of 5.50 % rates next month.
The lack of US data this week aside from the CPI number and leading indicators is helping the dollar recover some of its losses from the prior week. The recently reported drop in producer prices suggests that we could see a similar decline in consumer prices, especially as inflation growth slows globally.
After the CPI report, we have the release of the minutes from the Federal Reserve’s monetary policy meeting in January. This will most likely prove to be a non-event since the minutes should contain a similar the message as the one that Bernanke delivered at his semi-testimony on the economy and monetary policy, which is that they have adopted a wait and see approach.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and debt consolidation.
Today’s release of the MPC minutes from the monetary policy meeting held earlier this month is the main data out this week. The question being is whether there is room for another interest rate hike after the surprise rate hike in January.
If the decision to leave rates unchanged was unanimous, then the odds for a rate hike in March will be very low. If at least 2 members voted in favour of a rate hike, then market expectations will quickly adjust to reflect the possibility of 5.50 % rates next month.
The lack of US data this week aside from the CPI number and leading indicators is helping the dollar recover some of its losses from the prior week. The recently reported drop in producer prices suggests that we could see a similar decline in consumer prices, especially as inflation growth slows globally.
After the CPI report, we have the release of the minutes from the Federal Reserve’s monetary policy meeting in January. This will most likely prove to be a non-event since the minutes should contain a similar the message as the one that Bernanke delivered at his semi-testimony on the economy and monetary policy, which is that they have adopted a wait and see approach.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and debt consolidation.
Labels: Bank of England, interest rates, loans, refinancing rates
# posted by Dr Search- Principal Consultant at the Search Clinic @ 6:17 PM 0 comments
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Monday, February 19, 2007
Relatively quiet week on the loans data front
A week of choppy trading after a slew of important economic releases left GBP/USD modestly higher by the end of the week.
Overwhelming evidence that inflation pressures have eased in the UK economy kept Cable grounded, with PPI showing that input prices plunged 2.0 percent on petroleum product costs, while output prices jumped 0.3 percent as producers worked to boost profit margins.
Meanwhile, CPI fell materially lower at a rate of -0.8 percent, dragging the annual rate down to 2.7 percent - well below the critical threshold of 3.1 percent that would have prompted a warning action to UK parliament from BOE chief Merve ‘the Swerve’ King.
With interest rates in the UK and US at parity at 5.25 percent, loans trade may remain turbulent as economic data from both countries gives neither bank the impetus to adjust monetary policy in the near-term.
The minutes of the February BOE MPC meeting will likely earn most of the attention for the week, as the market will look to the voting record for the committee’s bias on policy. Mild wage growth is likely to keep hawkish impulses in check.
After a quiet start to the month last week’s blitz of data finally created some action in the currency market.
The US Trade deficit widened to -$61B while the TICS inflows shrank to a miniscule $15B. No matter how you sliced it the balance sheet news was horrid.
The rest of the data was hardly inspiring as well with Retail Sales printing weaker than expected and weekly jobless claims jumping a very hefty 43k more than forecast.
In short the news suggests that US economy is slowing rapidly and if that trend persists dollars woes may only be beginning.
Next week the action once again slows to a crawl with only the CPI and Fed minutes to occupy the markets. We may again begin to trade in a narrow range but for now the bias in the greenback is to the downside and the onus is on the dollar longs to prove the market wrong.
Last week’s calendar in the Euro-zone was relatively subdued and EURO strength came from USD weakness rather than its own data. Both the Trade Balance and the ZEW missed estimates, but not by much. More importantly the EZ GDP was revised to 3.3% from 3.0% original estimate.
Next week the Euro-Zone calendar is also barren with one exception. The German IFO survey is due to be released on Friday night and is likely to be the marquee event of the week. The market is looking for a small drop to 107.5 from 107.9 which if accurate, should not dent the unit much; IFO has hovered near record reading for most of the past year and has been one of the primary foundations for EURO strength.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and debt consolidation.
Overwhelming evidence that inflation pressures have eased in the UK economy kept Cable grounded, with PPI showing that input prices plunged 2.0 percent on petroleum product costs, while output prices jumped 0.3 percent as producers worked to boost profit margins.
Meanwhile, CPI fell materially lower at a rate of -0.8 percent, dragging the annual rate down to 2.7 percent - well below the critical threshold of 3.1 percent that would have prompted a warning action to UK parliament from BOE chief Merve ‘the Swerve’ King.
With interest rates in the UK and US at parity at 5.25 percent, loans trade may remain turbulent as economic data from both countries gives neither bank the impetus to adjust monetary policy in the near-term.
The minutes of the February BOE MPC meeting will likely earn most of the attention for the week, as the market will look to the voting record for the committee’s bias on policy. Mild wage growth is likely to keep hawkish impulses in check.
After a quiet start to the month last week’s blitz of data finally created some action in the currency market.
The US Trade deficit widened to -$61B while the TICS inflows shrank to a miniscule $15B. No matter how you sliced it the balance sheet news was horrid.
The rest of the data was hardly inspiring as well with Retail Sales printing weaker than expected and weekly jobless claims jumping a very hefty 43k more than forecast.
In short the news suggests that US economy is slowing rapidly and if that trend persists dollars woes may only be beginning.
Next week the action once again slows to a crawl with only the CPI and Fed minutes to occupy the markets. We may again begin to trade in a narrow range but for now the bias in the greenback is to the downside and the onus is on the dollar longs to prove the market wrong.
Last week’s calendar in the Euro-zone was relatively subdued and EURO strength came from USD weakness rather than its own data. Both the Trade Balance and the ZEW missed estimates, but not by much. More importantly the EZ GDP was revised to 3.3% from 3.0% original estimate.
Next week the Euro-Zone calendar is also barren with one exception. The German IFO survey is due to be released on Friday night and is likely to be the marquee event of the week. The market is looking for a small drop to 107.5 from 107.9 which if accurate, should not dent the unit much; IFO has hovered near record reading for most of the past year and has been one of the primary foundations for EURO strength.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and debt consolidation.
Labels: interest rates, loans, refinancing rates
# posted by Dr Search- Principal Consultant at the Search Clinic @ 2:23 PM 0 comments
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Friday, February 16, 2007
Lenders boosted by Bernanke
US government bond prices hit one-month highs on Friday as investors took heart after Ben Bernanke, chairman of the Federal Reserve, said inflation is easing. Weaker than expected data encouraged the bond bulls who felt Mr Bernanke’s comments heralded interest rate cuts in the face of slowing US economic growth.
By the week’s end, futures markets had fully priced in a quarter point cut in interest rates by the end of the year, up from a two-thirds chance at the beginning of the week.
Testifying before Congress, Mr Bernanke offered a balanced assessment that contrasted with that of other recent Fed members who had emphasised the risks of further rate increases.
While inflation remained the primary concern, he indicated that “the current stance of policy is likely to foster sustainable economic growth and a gradual ebbing of core inflation”.
However, investors focused on a perceived change of tone, as Mr Bernanke listed reasons to expect inflation would slow, including falling energy prices and the potential for accelerating incomes to be offset by higher productivity or lower corporate profit margins.
Investor concerns about the housing market were fuelled as starts data fell 14.3 per cent in January to a 10-year low.
US producer prices were also released, shrinking slightly more than expected in January, as energy prices declined sharply. On Thursday, a weak reading of business conditions in the mid-Atlantic region followed reports showing a surprise fall in industrial output and a surge in jobless claims.
The yield on the 10-year benchmark US Treasury was 1.6 basis points lower on the day at 4.694 per cent, down from 4.815 per cent on Monday. The two-year note yield was 0.9bp lower at 4.835 per cent, down from 4.929 per cent on the week.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and debt consolidation.
By the week’s end, futures markets had fully priced in a quarter point cut in interest rates by the end of the year, up from a two-thirds chance at the beginning of the week.
Testifying before Congress, Mr Bernanke offered a balanced assessment that contrasted with that of other recent Fed members who had emphasised the risks of further rate increases.
While inflation remained the primary concern, he indicated that “the current stance of policy is likely to foster sustainable economic growth and a gradual ebbing of core inflation”.
However, investors focused on a perceived change of tone, as Mr Bernanke listed reasons to expect inflation would slow, including falling energy prices and the potential for accelerating incomes to be offset by higher productivity or lower corporate profit margins.
Investor concerns about the housing market were fuelled as starts data fell 14.3 per cent in January to a 10-year low.
US producer prices were also released, shrinking slightly more than expected in January, as energy prices declined sharply. On Thursday, a weak reading of business conditions in the mid-Atlantic region followed reports showing a surprise fall in industrial output and a surge in jobless claims.
The yield on the 10-year benchmark US Treasury was 1.6 basis points lower on the day at 4.694 per cent, down from 4.815 per cent on Monday. The two-year note yield was 0.9bp lower at 4.835 per cent, down from 4.929 per cent on the week.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and debt consolidation.
Labels: Bernanke, interest rates
# posted by Dr Search- Principal Consultant at the Search Clinic @ 11:51 AM 0 comments
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Monday, February 12, 2007
Inflation key focus for loans market this week
The Bank of England’s quarterly inflation report released on Wednesday is expected to show January’s increase in interest rates will not be the last. The inflation report will provide BoE’s latest forecasts on growth and inflation.
Official figures indicate that gross domestic product (GDP) and especially inflation are already running above the central bank’s previous round of predictions in November. Data released last month showed the annual CPI rate jumped to 3.0 pct in December, taking the rate dangerously close to the 3.1 per cent mark, which, if it hits this level, would force BoE governor Mervyn King to write an explanatory letter to the Chancellor of Exchequer, Gordon Brown.
Inflation is however this month expected to have held close to the 10 year high, at 2.9 per cent, following last month’s 3 percent increase, the most since comparable records began in 1997.
Oil tumbled around one percent on Monday following Saudi Arabia’s oil minister signalled satisfaction with market conditions and some Asian refiners reported a rise in anticipated Saudi supplies next month.
Ali al-Naimi, oil minister of the world’s biggest exported and the cartel’s most powerful voice, said in an interview that the market was much healthier than before and that OPEC may not need to change output.
The Australian dollar was weak in early Monday trading after the central bank signalled interest rates will stay after inflation cools. The reserve bank of Australia cut its underlying inflation forecast for 2007 in its quarterly monetary policy statement released early this morning, say three increases to borrowing costs, up to a six year high of 6.25 percent eased price pressures.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and debt consolidation.
Official figures indicate that gross domestic product (GDP) and especially inflation are already running above the central bank’s previous round of predictions in November. Data released last month showed the annual CPI rate jumped to 3.0 pct in December, taking the rate dangerously close to the 3.1 per cent mark, which, if it hits this level, would force BoE governor Mervyn King to write an explanatory letter to the Chancellor of Exchequer, Gordon Brown.
Inflation is however this month expected to have held close to the 10 year high, at 2.9 per cent, following last month’s 3 percent increase, the most since comparable records began in 1997.
Oil tumbled around one percent on Monday following Saudi Arabia’s oil minister signalled satisfaction with market conditions and some Asian refiners reported a rise in anticipated Saudi supplies next month.
Ali al-Naimi, oil minister of the world’s biggest exported and the cartel’s most powerful voice, said in an interview that the market was much healthier than before and that OPEC may not need to change output.
The Australian dollar was weak in early Monday trading after the central bank signalled interest rates will stay after inflation cools. The reserve bank of Australia cut its underlying inflation forecast for 2007 in its quarterly monetary policy statement released early this morning, say three increases to borrowing costs, up to a six year high of 6.25 percent eased price pressures.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and debt consolidation.
Labels: Bank of England, inflation, interest rates, loans
# posted by Dr Search- Principal Consultant at the Search Clinic @ 9:55 AM 0 comments
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Tuesday, February 06, 2007
UK the focus after PMI data
A fall in the service sector purchasing managers’ survey (PMI) for January set the tone for possibly higher interest rates. The headline number surprised to the downside dropping from 60.6 in December to 59.2 in January; a reading above 50 indicates expansion.
The headline number was accompanied by small decreases in the new business, employment and expectation measures. The market witnessed a 10 year high in the December survey and an equally robust number for January would have signalled a significant hawkish stance on interest rates.
The input and output indices both increased so the overall picture is that inflationary impacts as a result will be monitored closely. We expect Merve the swerve et al to keep things as they are at 5.25% on Thursday.
All eyes are on the rate announcements on Thursday from the Bank of England and the ECB respectively, so things look to be a little dull until then. In the US yesterday, the January survey of non-manufacturing activity from the Institute for Supply Management was strong but had little impact on the dollar into afternoon trading.
The G7 meeting later this week provides something else to talk about; policymakers are expected to express concerns about massive growth in yen-funded carry trades which have put downward pressure on the Japanese currency.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and debt consolidation.
The headline number was accompanied by small decreases in the new business, employment and expectation measures. The market witnessed a 10 year high in the December survey and an equally robust number for January would have signalled a significant hawkish stance on interest rates.
The input and output indices both increased so the overall picture is that inflationary impacts as a result will be monitored closely. We expect Merve the swerve et al to keep things as they are at 5.25% on Thursday.
All eyes are on the rate announcements on Thursday from the Bank of England and the ECB respectively, so things look to be a little dull until then. In the US yesterday, the January survey of non-manufacturing activity from the Institute for Supply Management was strong but had little impact on the dollar into afternoon trading.
The G7 meeting later this week provides something else to talk about; policymakers are expected to express concerns about massive growth in yen-funded carry trades which have put downward pressure on the Japanese currency.
Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and debt consolidation.
Labels: Bank of England, ECB, interest rates, loans
# posted by Dr Search- Principal Consultant at the Search Clinic @ 9:17 AM 0 comments
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