• Tag Archives BoE
  • Albert Edwards: “The Last Time This Happened Was In January 2008”

    Two days ago, we were the first to point out that in a striking case of data revisionism, the Bureau of Economic Analysis, in an attempt to retroactively boost GDP, revised historical personal incomes lower, while adjusting its estimates of personal spending much higher, resulting in a sharp decline in personal savings, which as a result, was slashed from 5.5% according to the pre-revised data, to just 3.8%, in one excel calculation wiping out 30% of America’s “savings”, and cutting them by a quarter trillion dollars in the process, from $791 billion to $546 billion, a level last seen just before the last US recession.
    Today, SocGen’s grouchy bear Albert Edwards, commented on this drastic revision which disclosed that contrary to previous conventional wisdom that US consumers had been hunkering down in recent years and saving up for a rainy day, the surge in spending in late 2016 may have been the only catalyst that prevented the US from collapsing into outright contraction. Edwards also reminds us that such a dramatic savings slump last occurred in 2007, just before all hell broke loose.
    As Edwards writes, “very recent data confirms slumping household saving ratios in both the US and UK. This was last seen in 2007, just before the bursting debt bubble blew the global economy and financial system to smithereens. The Fed and BoE should surely hang their heads in shame having presided over yet another impending disaster. Why will politicians and the people tolerate this incompetence? Indeed they won’t.”

    This post was published at Zero Hedge on Aug 3, 2017.

  • BOE Preview: Whispers Of 25bps

    All eyes are now on the midday announcement from the BoE, where a 25bp rate rise is only expected by a very few, but more anticipating signals that a move is forthcoming later this year.
    The vote split will tell is whether Haldane – or anyone else – has moved to the hawkish camp, but with Forbes having left the commitee, a 6-2 split is also likely. Comments from Messrs McCafferty and Saunders suggest there is little or no chance that they have changed their stance from the previous meeting.
    Looking at the PMIs, the data is relatively healthy at the present time, with both manufacturing and services up on expectations as well as June levels, but for consideration at the MPC will be the growth rate, which has slipped from 2.0% in Q1 to 1.7% in Q2.
    Wage growth is also a concern, but although earnings were down on May levels, Jun was not as soft as expected.

    This post was published at Zero Hedge on Aug 3, 2017.

  • Pound Plunges After BOE Votes 6-2 To Keep Rates Record Low, Cuts Growth Forecast

    MPC holds #BankRate at 0.25%, maintains government bond purchases at 435bn and corporate bond purchases at 10bn. pic.twitter.com/ccUHh8b2IG
    — Bank of England (@bankofengland) August 3, 2017

    The whispers about a potential rate hike by the recently hawkish BOE ended up being wrong, when moments ago the Bank of England announced that in a 6-2 decision it kept rates unchanged at 0.25%, largely as expected. Saunders and McCafferty dissented in favor of an immediate interest-rate increase, with Haldane refusing to join the dissenters.
    In separate unanimous decisions, the central bank also kept its bond purchase programs unchanged at GBP10BN and GBP435BN for corporate and government bonds respectively.
    The pound tumbled on the news…

    This post was published at Zero Hedge on Aug 3, 2017.

  • “You Know What You Did”: Scaramucci Punked By Email Spoofer Pretending To Be Priebus

    The first two times infamous email spoofer @SINON_REBORN struck, the UK was scandalized when first Barclays CEO Jes Staley, then the head of the BOE, Mark Carney himself, were duped into lengthy email conversations with the “prankster” as the FT reported at the time. Staley, thinking he was being emailed by Barclays chair John McFarlane, offered his effusive praise to his respondent, saying among other things that he had “all the fearlessness of Clapton.” Carney, in turn, responded to emails from the imposter pretending to be Anthony Habgood, the chairman of the court of the BoE.
    Then, in June, the spoofer extended his winning streak by also punking Goldman’s Lloyd Blankfein and Citi’s Michael Corbat into believing he was someone else.
    Now, the same prankster, a 38-year-old web designer from Manchester according to the FT, has struck again, this time fooling several highly placed White House officials on several occasions, most remarkably Anthony Scaramucci, into thinking he was someone else.
    As CNN reports, the exchange between the prankster and the Mooch may have played a role in the tensions between the now former White House Communications Director and the since-fired White House Chief of Staff, Reince Priebus, who replacement Gen. Kelly fired Scaramucci.

    This post was published at Zero Hedge on Aug 1, 2017.

  • Key Events In The Coming Week: Payrolls, Central Banks, China And More

    As many traders quietly leave for summer break soaking up even more liquidity as they go, a busy US calendar unfolds in the week ahead, with ISM, PCE price data and, of course, payrolls in the spotlight.
    Key Events, courtesy of RanSquawk
    Monday: Eurozone CPI (Jul, P), China Official PMIs (Jul) Tuesday: RBA MonPol Decision, Eurozone GDP (Q2, Initial) Wednesday: ADP, Fed’s Mester, Williams speak Thursday: BoE MonPol Decision, Meeting Minutes & Quarterly Inflation Report Friday: US Labour Market Report (Jun), Canadian Labour Market Report (Jun), RBA SoMP In North America, June’s US Labor Market Report headlines the docket next week. Analysts expect the Nonfarm Payrolls headline to print at 187,000, with the unemployment rate expected to tick down to 4.3%, while hourly earnings are expected to remain subdued. The H1 average for the Nonfarm Payrolls release sits at 180,000. Following its latest statement, the Federal Reserve noted that ‘job gains have been solid, while household spending and business fixed investment have continued to expand.’ The main worry is wage growth, which has remained muted, and is perhaps keeping a lid on the Federal Reserve’s hiking cycle at present, as inflation has been kept in check.

    This post was published at Zero Hedge on Jul 31, 2017.

  • Why Surging UK Household Debt Will Cause The Next Crisis

    – Easy credit offered by UK banks is endangering ‘everyone else in the economy’
    – UK banks are ‘dicing with the spiral of complacency’ again
    – Bank of England official believes household debt is good in moderation
    – Household debt now equals 135% of household income
    – Now costs half of average income to raise a child
    – Real incomes not keeping up with real inflation
    – 41% of those in debt are in full-time work
    – 1.537 trillion owed by the end of May 2017
    Editor: Mark O’Byrne
    Why UK household debt will cause the next crisis
    ‘Household debt is good in moderation,’ Alex Brazier, executive director of financial stability at the Bank of England (BoE), told financial risk specialists earlier this week. But, it ‘can be dangerous in excess.’
    The problem with ‘in moderation’ is that no-one knows what a moderate measure of something is until they have had too much of it. Sub prime borrowers in the U. S. and property buyers in Ireland and the UK did not know they would contribute to a global debt crisis. Central bankers in Germany in the early 1920s and more recently in Zimbabwe never thought they were doing something that would be as detrimental as it ultimately was.

    This post was published at Gold Core on July 26, 2017.

  • Breslow: “Normal, Violent Or Extreme Political Events Are Now Taken To Be Fully Tradable Affairs”

    Taking a break from his “big picture” macro observations, and – at least recently – bashing of complacent traders, algos and central planning, overnight Bloomberg’s macro commentator focused on the FX market in general, and why he believes it is the “best” market for those “politically bent”, noting five particular reasons for his adoration of FX trading:
    everything is fair game: “in today’s world there’s nothing local about almost any aspect of the process” and FX is the only place where one can short with impunity“ there are no negative connotations associated with shorting: “Every trade involves doing so. You get to attack things without someone questioning your couth. After the U. K. referendum the currency got killed on perceived relative value, but that was all right because the FTSE did just fine. You didn’t see the BOE bemoan the lower pound” so simple, Mrs Watanabe can do it: “In equities and bonds it’s best to first ask how an individual market works and what paperwork is needed. In FX it’s point and click and your prime broker takes care of everything else” all that matters is speed: “It’s in the DNA of FX traders to feast on a headline and then ask what it’s made of. Speed is of the essence.“ and, best of all, you get to trade first, ask questions later: “currencies the perfect vehicle to get involved in issues one may or may not actually know anything about.”

    This post was published at Zero Hedge on Jul 19, 2017.

  • BOE Warns Popular 35-Year Mortgages Shackle Consumers With “Lifetime Of Debt”

    Consumers in the UK have been on a credit binge since the Bank of England cut its benchmark interest rate to an all-time low as investors braced for the widely anticipated economic shock of Brexit – a shock that, unsurprisingly, has yet to arrive, despite warnings from the academic establishment that a “leave” vote would trigger an imminent economic catastrophe. And now, with total credit growth rising at 10% a year, the BOE is warning that the increase in unsecured lending is becoming increasingly unsustainable.
    While the central bank is less concerned with mortgage debt than credit-card debt and other types of consumer credit, some at the bank are beginning to worry that the growing demand for long-term mortgages will shackle borrowers with a lifetime of debt, according to the Telegraph.
    ‘British families are signing up for a lifetime of debt with almost one in seven borrowers now taking out mortgages of 35 years or more, official figures show. Rapid house price growth has encouraged borrowers to sign longer mortgage deals as a way of reducing monthly payments and easing affordability pressures.

    This post was published at Zero Hedge on Jul 17, 2017.

  • ‘Bigger Systemic Risk’ Now Than 2008 – Bank of England

    – Bank of England warn that ‘bigger systemic risk’ now than in 2008
    – BOE, Prudential Regulation Authority (PRA) concerns re financial system
    – Banks accused of ‘balance sheet trickery’ -undermining spirit of post-08 rules
    – EU & UK corporate bond markets may be bigger source of instability than ’08
    – Credit card debt and car loan surge could cause another financial crisis
    – PRA warn banks returning to similar practices to those that sparked 08 crisis
    – ‘Conscious that corporate memories can be shed surprisingly fast’ warns PRA Chair
    Editor Mark O’Byrne
    Stark warnings have been issued by the Bank of England and its regulatory arm, the Prudential Regulation Authority (PRA).
    In less than one week the two bodies issued papers and speeches to warn industry members that many banks are showing signs of making the same mistakes that led to the 2008 financial crisis – the outcomes of which are predicted to be worse than those seen just nine years ago.

    This post was published at Gold Core on July 17, 2017.

  • London Property Bubble Bursting? UK In Unchartered Territory On Brexit and Election Mess

    – London property bubble bursting? UK in unchartered territory on Brexit and election mess
    – Evidence of downturn in London housing market
    – Over 75% of London homes now selling below asking price
    – Prime north London property down 6 per cent annually
    – House prices have not fallen for three consecutive months since the 2009 crisis
    – Bank of England report expresses worry over UK property market
    – ‘Adverse shock’ to UK economy may amplify negative feedback loop
    – Increased political and economic uncertainty has weakened fragile London buyer sentiment
    – Bank of England Financial Stability Report: ‘Mortgages are the largest loan exposure for UK lenders’
    – BOE FSR refers to a ‘self-reinforcing feedback loop’ that, if triggered, would cause another 2008-style crisis in the UK
    Is the London property market heading for tough times? The most recent housing figures and a new Bank of England report suggest it may well be.
    Recent figures show that 77% of London houses sold in May went at below asking price, up from 72% in April. London as the capital of UK reflects international market but international investors have major concerns over uncertainties namely Brexit and the current state of the government. As a result London house prices are rising at their weakest rate in five years (if they are rising at all).
    In prime estate London things are particularly bad, with prices in prime north and north west London falling by 6% in the last year.

    This post was published at Gold Core on June 29, 2017.

  • Bank Of England Orders Banks To Boost Capital To “Protect From Rising Risks”

    In addition to the previously noted fireworks from Mario Draghi, also on Tuesday the Bank of England ordered banks to build greater capital cushions in the coming months to protect the U. K. financial system from risks ranging from Brexit to China to booming consumer borrowing. In its twice-annual financial stability report, the BOE’s Financial Policy Committee said that there are ‘pockets of risk’ in the financial system, and to address them the BOE set the countercyclical capital buffer at 0.5% of risk-weighted assets for U. K. loans effective in June 2018, and if nothing material changes the central bank plans to increase the level again to 1% in November.
    Each increase of 0.5 percent will swell banks’ cushion of common equity Tier 1, the highest-quality capital, by 5.7 billion pounds, according to the BOE’s Financial Stability Report. The BOE opted for a staggered approach because it’s less likely to result in banks tightening lending in response.
    Additionally, next month regulators will publish new guidelines for consumer lending to ensure risks are priced and managed appropriately.
    ‘We want to move the levels of capital back up to the level they should be — any time you move into more benign credit conditions there have been fewer defaults,’ which can lead to complacency, Governor Mark Carney said on Tuesday. Regarding Brexit, ‘there are risks around that process, so contingency planning needs to be not only put in place but also activated.’

    This post was published at Zero Hedge on Jun 27, 2017.

  • Week in Review: June 24, 2017

    While the Federal Reserve is desperate to depict an optimistic vision for the global economy, their fellow central bankers aren’t buying it. Earlier this week Mark Carney of the Bank of England shutdown talk of the BOE possibly following the Fed’s lead in raising interest rates. Meanwhile, as Fed officials are openly worrying about whether technological advances are undermining their misguided war against deflation, the ECB is desperately looking for people to blame if Europeans begin to feel the pain from rising prices.
    On Mises Weekends, Jeff is joined by Dr. Ed Stringham, a Mises associated scholar and the author of the book Private Governance. More and more Americans are waking up to the reality that the US criminal justice system is hopelessly broken, riddled with bad incentives and bad actors. In the wake of recent police shootings Jeff and Ed discuss how and why private security firms could create vastly better outcomes for crime victims, society, and even perpetrators. This is a fascinating discussion you won’t want to miss.

    This post was published at Ludwig von Mises Institute on June 24, 2017.

  • One “Data-Dependent” Trader Is “Looking At The Bounce In Gold As Sentiment Indicator”

    As US (and global) economic data has disappointed at a rate not seen since Bernanke unleashed Operation Twist and QE3, so traders are shrugging off declining earnings expectations and weak macro data in favor of the continued belief that The Fed (or ECB or BoJ or BoE or PBOC or SNB) has their back. So, as former fund manager Richard Breslow notes below, it appears the ‘data’ that everyone is ‘dependent’ upon is very much in the eye of the beholder…
    Via Bloomberg,
    We’re all data-dependent. It’s not just the central banks that hide behind that aphorism. Traders and investors operate that way too. It’s just that data is a very poorly defined word and concept. The dictionary speaks of facts and specifics. But in reality it includes, biases, positions and a whole lot of other subjective factors. You and I can, quite properly, look at the same data and react differently.
    So while it’s a universally held concept that is proudly used to denote dispassionate rationality, it’s in fact a meaningless one.

    This post was published at Zero Hedge on Jun 23, 2017.

  • Pound Surges As BOE Chief Economist “Leans Toward” Hiking Rates In 2017

    Here we go again.
    One week after the pound surged following the BOE’s unexpectedly hawkish 5-3 vote split, then tumbled after Mark Carney’s speech yesterday which suggested no rate hike is coming any time soon, today, for the third time in almost as many days, all GBPUSD stops were taken out after BoE Chief Economist, Andy Haldane, surprised the market with unexpectedly hawkish comments in his speech in Yorkshire. He said he was leaning toward joining the hawks on the Monetary Policy Committee and considered a vote for a rate increase as early as June. He also said he favors withdrawing some of the August 2016 stimulus in the second half, and that the partial withdrawal of additional stimulus put in place last year would be ‘prudent relatively soon, provided the data come in broadly as expected in the period ahead.’

    This post was published at Zero Hedge on Jun 21, 2017.

  • Futures, European Stocks Flat As Oil Suddenly Tumbles; Pound Slides

    Maybe not too much of a surprise to see oil prices fall, given how much the G10 economic surprises index has collapsed in recent weeks. pic.twitter.com/aXkvHOzZMt
    — Jamie McGeever (@ReutersJamie) June 20, 2017

    European stocks were flat after starting off strongly earlier, dragged lower by energy stocks. Asian stocks, U. S. futures little changed as oil tumbled with Brent tumbling as low as $45.85/bbl to the lowest intraday since November 30 and taking out a 38.2% Fib support, after a one-minute spike in volume to a day-high 5,208 lots just after 6am, with WTI mirroring Brent’s momentum, and falling as much as 98c to $43.22, lowest since November 14.
    As Reuters’ Jamie McGeever points out, “maybe not too much of a surprise to see oil prices fall, given how much the G10 economic surprises index has collapsed in recent weeks.”
    The pound sank for a second day, with the GBPUSD tumbling to 1.2661, alongside gilt yields as Britain central bank governor Mark Carney reversed the earlier BOE “vote split” hawkishness and said he is still worried about the impact Brexit will have on the U. K. economy and said he “now is not the time” to raise rates. Sterling weakened against all of its Group-of-10 peers, and gilt yields declined as Carney said that domestic inflation pressures remain subdued. Speaking at London’s Mansion House on Tuesday, he also highlighted the weakness in the economy and the increased uncertainty as the nation formally starts talks to exit the European Union.

    This post was published at Zero Hedge on Jun 20, 2017.

  • Key Events In The Coming Quiet Week: Brexit, Housing And Lots Of Fed Speakers

    In an otherwise relatively quiet week in which the only upcoming US data is housing, current account and jobless claims, UK politics will again draw attention, one year (on Friday) after the Brexit referendum and as noted earlier, Brexit negotiations begin on Monday, despite lingering political uncertainty in the UK. Also no less than 9 FOMC members are scheduled to speak this week.
    On Wednesday the Queen’s Speech will mark the opening of parliament and outline the government’s legislative program, despite no formal agreement between the Conservative Party and the DUP (at time of writing). Bank of England speakers will also get attention after last week’s surprisingly hawkish BOE, particularly Governor Carney’s re-scheduled Mansion House speech. Overall we could see a headline-heavy week, making for a volatile period ahead for GBP.
    A quick snapshot of what to expect:
    A very light calendar in the US, with only housing data, current account
    balance and the usual weekly jobless claims. We do hear from various
    Fed speakers, including New York Fed President Dudley on Monday and Vice
    Chair Fischer on Tuesday.

    This post was published at Zero Hedge on Jun 19, 2017.

  • Pound Spikes As BOE “Hawkish” Vote Surprises Traders

    MPC holds #BankRate at 0.25%, maintains government bond purchases at 435bn and corporate bond purchases at 10bn. pic.twitter.com/0XX5V47QZg
    — Bank of England (@bankofengland) June 15, 2017

    The pound sharply reversed overnight losses (the result of weaker than expected UK retail sales 0.90% Y/Y, exp. 1.7%) rising as much as 0.3% to 1.2794 after the BOE announced it kept rates at 0.25%, however the hawkish surprise was the 5-3 vote, far closer than the 7-1 expected, as two more MPC members , Saunders and McCafferty joined Forbes in calling for a rate hike on the back of rising inflation concerns.
    BANK OF ENGLAND KEEPS KEY INTEREST RATE AT 0.25%; VOTE 5-3 SAUNDERS, MCCAFFERTY JOIN FORBES IN VOTE FOR BOE RATE HIKE Amid market chatter that Forbes would no longer favor a rate hike, the fact that three policy makers voted for a hike sees algo names jumping on the headline, BBg reported.
    As the BOE stated, “Our Monetary Policy Committee has voted 5-3 to keep Bank Rate at 0.25%. The committee voted unanimously to continue with the programmes of corporate bond purchases and UK government bond purchases.” The result on the currency was immediate, sending cable surging on the news of the growing split within the MPC.

    This post was published at Zero Hedge on Jun 15, 2017.

  • Key Events In The Coming Busy Week: Fed, BOJ, BOE, SNB, US Inflation And Retail Sales

    After a tumultous week in the world of politics, with non-stop Trump drama in the US, a disastrous for Theresa May general election in the UK, and pro-establishment results in France and Italy, this is shaping up as another busy week ahead with multiple CB meetings, a full data calendar and even another important Eurogroup meeting for Greece. Wednesday’s FOMC will be the main event, with the Fed expected to hike 25bp (see full Goldman preview here), while the BOJ, BOE and SNB all remain on hold.
    Courtesy of BofA, here is the breakdown of key events:
    FOMC the star in a G10 Central Bank week After the eventful UK election, and less than eventful ECB meeting, the week ahead is a busy one, opening with the first round of the French parliamentary elections and with a plethora of data releases and central bank decisions to keep markets occupied. Another important Eurogroup meeting for Greece rounds out a full schedule.
    The FOMC meeting will be the main event of the week, where the Fed will deliver a 25 bps rate hike, in line with market expectations. While very weak retail sales or CPI could dissuade the Fed, this remains a very unlikely scenario absent a collapse in Wednesday’s CPI print. BofA expects lower inflation and growth forecasts, while the dots will show 3 hikes in 2018 and 3.25 hikes in 2019. The press conference will likely be focused on balance sheet normalization and implementation timing.
    No change from BoJ, BOE or SNB

    This post was published at Zero Hedge on Jun 12, 2017.

  • BOE Keeps Rate At 0.25%, Warns Rates May Rise Faster In Case Of “Smooth” Brexit

    Just as consensus had expected, the BOE kept its interest rate at 0.25% after a 7-1 vote; in a unaimous vote it also kept its corporate and government bond purchase programs unchanged at GBP10 and GBP435 BN respectively.
    The biggest highlight in the statement was the BOE’s note that monetary policy may need to be tightened ‘by a somewhat greater extent over the forecast period than the very gently rising path implied by the market curve underlying the May projections’ adding that the rate outlook depends on economy performing as expected, and also on Brexit taking place “smoothly.”
    Some highlights:
    BOE outlook assumes ‘smooth’ Brexit BOE publishes quarterly Inflation Report, cuts 2017 GDP forecast to 1.9% v 2%, raises 2018 to 1.7%, 2019 to 1.8% BOE raises 2017 CPI forecast to 2.7%, sees rate at 2.8% in 4Q BOE sees inflation at 2.2% in 2 yrs, 2.3% in 3 yrs There was a notable contingency: in the BOE’s forecast, the bank said “the output gap closes and inflation rises slightly further above the target”, however this is “conditioned on the assumptions that the adjustment to the United Kingdom’s new relationship with the European Union is smooth, and that Bank Rate follows the market-implied path for interest rates.”

    This post was published at Zero Hedge on May 11, 2017.

  • Stocks, Sterling, Bond Yields Drop As BoE’s Carney Admits No Plan For Disorderly Brexit

    US equity futures have legged lower this morning as Cable tumbles folowing remarks from Bank of England governor Carney that they “haven’t modeled for a disorderly Brexit.” It appears the omniscience of central bankers is very briefly in question….
    Dow Futures legged 40 points lower as Cable broke below 1.29…
    And as Citi notes, GBPUSD is not looking great – we’re now testing immediate support at 1.2865, and we are down almost 65 pips since the BoE initial announcement. Meanwhile EURGBP is edging higher, and GBPJPY is so much lower it might actually be causing a small squeeze in JPY elsewhere.

    This post was published at Zero Hedge on May 11, 2017.