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☆ Bank of England says it won't hesitate to hike rates after pound falls to historic low
▼ + stars: | 2022-09-26 | by ( Sam Meredith | ) www.cnbc.com time to read: +1 min

Analysts expect the Bank of England may need to raise interest rates more aggressively following market turbulence on Monday morning. LONDON — The Bank of England on Monday said it is monitoring financial market developments "very closely" after a dramatic morning of turmoil saw the British pound fall to an all-time low against the U.S. dollar. The U.K. currency pared some of its losses through the session but extended its fall versus the dollar immediately after the Bank of England's statement. "The Bank is monitoring developments in financial markets very closely in light of the significant repricing of financial assets," Bank of England Governor Andrew Bailey said in a statement. "The role of monetary policy is to ensure that demand does not get ahead of supply in a way that leads to more inflation over the medium term," Bailey said.

☆ Bank of England tries to calm panicked markets
▼ + stars: | 2022-09-26 | by ( Julia Horowitz | ) edition.cnn.com time to read: +2 min

London CNN Business —UK policymakers are trying to calm markets after a plan by Prime Minister Liz Truss to cut taxes while ramping up borrowing sparked panic among investors worried it could feed inflation and destabilize government finances. The UK pound has plunged and government bonds have collapsed since Truss and Kwarteng revealed their economic program on Friday. It’s intended to spur economic growth, but has fed alarm among investors, who are worried about the unorthodox approach. “It remains to be seen whether today’s statement by the government and the Bank of England will be enough to ease the markets’ fears about the government’s fiscal policy,” said Paul Dales, chief UK economist at Capital Economics. “The initial reaction in the markets, with the pound falling again after it regained some ground, suggests that the issue may not be put to bed yet.”

A general view of the Bank of England (BoE) building, the BoE confirmed to raise interest rates to 1.75%, in London, Britain, August 4, 2022. REUTERS/Maja Smiejkowska/File PhotoLONDON, Sept 26 (Reuters) - Bank of England Governor Andrew Bailey said on Monday that the BoE "will not hesitate" to raise interest rates if needed to meet its 2% inflation target, and that it was watching financial markets "very closely" following sharp moves in asset prices. "The Bank is monitoring developments in financial markets very closely in light of the significant repricing of financial assets," Bailey said in a statement. However, traders viewed the BoE statement has decreasing the likelihood of a move before the BoE's next scheduled rate announcement on Nov. 3. Sterling fell more than a cent against the dollar and interest rate swaps for one week ahead priced in substantially lower rates than immediately before.

☆ The US dollar will stay 'stronger for longer' against global currencies as the Fed commits to taming inflation, UBS says
▼ + stars: | 2022-09-26 | by ( Matthew Fox | ) www.businessinsider.com time to read: +3 min

The US dollar is set to stay "stronger for longer" while the Fed continues to hike rates, according to UBS. The Russia-Ukraine war and ongoing volatility in the British pound means the dollar will continue its climb, UBS said. The bank said the dollar will stay "stronger for longer" as long as the Federal Reserve remains committed to taming inflation via more interest rate hikes despite the risk of a recession. When it comes to the British pound, UK debt sustainability remains top of mind for traders and is likely to keep the pound under pressure. "With the global growth outlook uncertain, the US dollar is likely to benefit both from its safe-haven quality and its yield advantage," UBS concluded.

☆ The drop in the pound is sending UK rate expectations to 6% in 2023 - and that means a spike of 73% for some mortgage payments, economist says
▼ + stars: | 2022-09-26 | by ( Carla Mozée | ) www.businessinsider.com time to read: +3 min

Expectations are rising that the UK's benchmark rate will reach 6% in 2023 on the back of the pound's slide. That could mean monthly payments for some refinanced mortgages could jump by 73% to nearly £1,500 in the first half of next year, said Pantheon Macroeconomics's chief UK economist. In dollar terms Monday, monthly payments could rise to $1,593 from $923. A 2-year fixed rate mortgage is the shortest-term offered in the UK for a fixed home loan, according to product comparison website Money.co.uk. The UK's central bank has raised the benchmark interest rate to 2.25% in seven hikes since December to control inflation.

☆ The pound falls again versus the dollar after the Bank of England says it's monitoring financial markets following the currency's slide to a record low
▼ + stars: | 2022-09-26 | by ( Carla Mozée | ) www.businessinsider.com time to read: +3 min

The pound after the Bank of England said it's closely monitoring financial markets. The pound fell by nearly 2% after the statement but didn't return to record lows. "The Bank is monitoring developments in financial markets very closely in light of the significant repricing of financial assets," BoE Governor Andrew Bailey said in a statement Monday. Financial markets were looking for the Bank of England to say it would raise interest rates or enact emergency measures to aid the pound. Financial markets on Monday were pricing in expectations for UK interest rates to rise to soar to 6% next year on the back of sterling's fall.

☆ Euro zone yields at multi-year highs, Italian bonds underperform
▼ + stars: | 2022-09-26 | by ( Stefano Rebaudo | ) www.reuters.com time to read: +4 min

Register now for FREE unlimited access to Reuters.com RegisterSept 26 (Reuters) - Euro zone government bond yields jumped to multi-year highs amid expectations that central banks will keep tightening their monetary policy despite recession risks and a new sell-off in British gilts. Meanwhile, the spread between Italian and German yields widened after the rightist coalition won a clear majority in Sunday's elections. Italian bond (BTP) prices are also more susceptible to shifts in interest rate expectations, given the country's vast debt burden. Giorgia Meloni looks set to become Italy's first woman prime minister at the head of its most right-wing government since World War Two. "Bond yields across Europe are correlated, and today's jump in Britain yields is again affecting the euro area," he added.

The exterior of the Marriner S. Eccles Federal Reserve Board Building is seen in Washington, D.C., U.S., June 14, 2022. Asked at a Washington Post event whether he felt U.S. investors had taken an overly optimistic view of Fed policy until a recent sharp sell-off begin, Atlanta Fed president Raphael Bostic said that was beside the point. "Until that happens we're going to see I think a lot of volatility in the marketplace in all directions." "At the moment, inflation remains too high," Collins said in her first policy remarks since becoming head of the bank. The Fed maintains a 2% inflation target, as measured by the personal consumptions expenditures price index.

☆ Futures steady after Fed-driven selloff
▼ + stars: | 2022-09-22 | by ( ) www.reuters.com time to read: +2 min

A Wall St. street sign is seen near the New York Stock Exchange (NYSE) in New York City, U.S., September 17, 2019. The three main indexes finished more than 1.7% down on Wednesday, with the Dow (.DJI) posting its lowest close since June 17. The Nasdaq (.IXIC) and S&P 500 (.SPX), respectively, ended at their lowest point since July 1 and June 30. Worries about the impact of aggressive interest rate hikes on the economy and corporate profits have left the benchmark S&P 500 less that 4% away from its mid-June low, its weakest point of the year. ET, Dow e-minis were up 147 points, or 0.49%, S&P 500 e-minis were up 17.25 points, or 0.45%, and Nasdaq 100 e-minis were up 48.75 points, or 0.42%.

☆ Fed expected to hike rates by three-quarters of a point again, but its forecast may matter most
▼ + stars: | 2022-09-20 | by ( Patti Domm | In | ) www.cnbc.com time to read: +6 min

The Fed is expected to fire off another three-quarter point rate hike — its third in a row. We had theoretical road maps up until now, but from the Fed's point of view they're crossing into a world of tightening. Neutral is considered to be the interest rate level where Fed policy is no longer easy, but not yet restrictive. The Fed has considered 2.5% to be neutral, and if it raises by three-quarters of a point, fed funds will be in a range of 3% to 3.25%. In June, the Fed forecast the unemployment rate would be 3.7% this year, the same level it was at in August.

Investors' focus on the Fed's policy rate is understandable, but they should not underestimate how much the Fed's other policy lever - quantitative tightening - could tighten financial conditions and crush asset prices even further. chartBut as the wild post-pandemic gyrations in markets, economic activity, inflation, and policy have shown, no one really knows. Are markets ready for QT to kick in as well? "Fed QT training wheels are off. He estimates that every $100 billion of QT is the equivalent to a 12 bps increase in the policy rate.

☆ The best investing stories of July: How to win the next phase of COVID-19 — 'hidden' high-upside businesses — record-cheap value stocks
▼ + stars: | 2020-08-04 | by ( Business Insider | ) www.businessinsider.com time to read: +4 min

Many of them are preparing for the next phase of life in the stock market — one characterized by stimulus uncertainty and a US economic recovery that's lagging the rest of the world. He foresees a so-called squeeze higher for value stocks, and recommends that investors position their portfolios to profit from a rotation away from popular growth names. Look no further:Chart of the weekJPMorganThe JPMorgan chart above — compiled by the firm's quant guru, Marko Kolanovic — shows that value stocks are now trading at a record cheapness relative to growth. Kolanovic's takeaway from this trend is that value stocks are susceptible to a squeeze higher, and investors should rightly position their portfolios ahead of time. — Marko Kolanovic, global head of macro quantitative and derivatives research at JPMorgan, on why he sees a value-stock rally in the cards

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