In the week that both Governor Carney and Prime Minister May joint forces to echo the importance of free trade and labour movement in a post-Brexit era, today’s GDP figure for quarter 2 delivered a stark warning of the trouble that lies ahead for the UK. It comes as no coincidence that the last time the UK GDP figure read 1.5% (YOY) was almost 4 years ago in an economy that was moving away from the shadows of the 2008 financial crisis. A modern-day crisis now hangs over the UK economy even though Governor Carney signalled that monetary tightening would be initiated ‘in the coming months’. As growth continues to stagnate, the Bank of England’s call for an early rate hike may now seem premature with the UK economy entering an era of deep uncertainty after the 4th round of Brexit talks failed to deliver any real substance.
Anthony Kurukgy quoted in Reuters
Third time a charm for GDP estimates across the Atlantic this afternoon will have Mr Trump’s fans rejoicing after three consecutive monthly estimates culminating at 3.1%. With investors still grappling with news that Mr Carney has changed his tune on rates, markets will now have more than one eye focused on Yellen and her supposed hike in December. After a more bullish Fed meeting this month the tide appears to be turning at a crucial point, with Mrs Yellen and Trump seemingly singing to the same chorus. With growth on the upward trajectory and inflation perhaps not causing the headache some Fed officials cited earlier in the year, the US is firing on almost all cylinders coming into year-end.
Alex Lydall quoted in The Guardian
Eurozone investors have seen the single state bloc take the mantle of ‘save haven’ in recent times as geo-political uncertainties across the globe have boosted European stocks and government treasuries. Market participants have debated continually through 2016-17 the impact of woefully low inflation levels, but figures this morning show that the eurozone was able to hold the 1.5% it had registered the month previous, giving some comfort to a central bank that appears to be moving in a less ‘dovish’ direction. Although the print points to a degree of normalisation, the print should all but confirm Mario Draghi still needs more time and evidence that Inflation is moving in the right direction before the European Central Bank’s monetary stance can seriously change.
Anthony Kurukgy, Senior Sales Trader at Foenix Partners, comments on the Eurozone CPI print.