The waters are running calm across the markets this week. The general trend has been positive with bond valuations improving, although US equities dipped compared with their European counterparts due in the main to technology stocks weakening before recovering yesterday.
The financial news flow has been fairly benign for once, except for the usual deliberations about when interest rates will fall. Both the Federal Reserve (Fed) and the Bank of England (BoE), unsurprisingly, left rates on hold.
We are starting to hear more about the circus surrounding US elections and undoubtedly this will be given more and more copy in the unfolding months. It’s worth remembering though, that the key dynamics impacting market sentiment are inflation, interest rates and corporate profitability.
Here is this week’s agenda:
- Interest rate outlook
- Shop price inflation falls
- UK investors may be superbly positioned
- Borrowing costs fall for the Treasury
- Mixed news for technology stocks
- US small caps look attractive
- Summary
Interest rate outlook
It was no surprise that the BoE kept the interest rate on hold at 5.25%.
In its statement, the BoE forecast that consumer price inflation will “fall temporarily” to its 2% target in the second quarter, before increasing during the remainder of this year. A long way from those lofty heights of double-digit inflation! The BoE also moved the needle as the rhetoric is more orientated around when interest rates will be cut and not “tightening”.
Continues….
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