• Tag Archives BoE
  • 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.

  • Key Events In The Coming Week: Inflation, Spending In The Spotlight

    With the French election now finally in the rearview mirror, this week’s focus is on global inflation releases, with the spotlight falling on the US and China, as well as retail sales in the US. We also have BoE and RBNZ rates meetings. In other data we note industrial production in the Eurozone, UK and Norway along with US retail sales and Fed speakers.
    Key developed market events
    Thursday, May 11: New Zealand, RBNZ meeting. GS 1.75%, consensus 1.75%, last 1.75%. Looking to the May meeting, while the RBNZ is likely to remain on hold for now, we expect upgrades to the Bank’s inflation forecasts and – possibly – a more constructive description for the global growth outlook. Thursday, May 11: United Kingdom, BOE meeting. GS 0.25%, consensus 0.25%, last 0.25%. We expect no change in Bank Rate or in other policy settings, yet for the MPC to express some skepticism about the flatness of the forward curve for UK rates. Friday, May 12: United States, CPI (Apr). Core: +0.21% mom, consensus +0.2% mom, last -0.1% mom. We expect a 0.21% increase in April core CPI following last month’s outright decline, reflecting a relatively large state-level tobacco tax increase as well as the waning drag from Verizon unlimited data plans. Friday, May 12: United States, Retail sales (Apr). Core: +0.4% mom, consensus +0.4% mom, last +0.6% mom. We estimate core retail sales (ex-autos, gasoline, and building materials) rose 0.4% in April, reflecting improving sales in mall-based discretionary categories after tax refund-related weakness in February and a likely drag in March from unseasonably cold and snowy weather. At the same time, preparations for Winter Storm Stella likely boosted food and beverage sales (+0.5% in March), and we look for sequential softness in that category.

    This post was published at Zero Hedge on May 8, 2017.

  • Treasury Select Committee MP calls for renewed investigation into secret LIBOR-rigging recordings

    Chris Philp M.P. told Business Insider that he will officially call for the reopening of a Treasury Select Committee (TSC) investigation into LIBOR rigging, now that a secret recording of two former Barclays bankers has been made public that allegedly links the Bank of England to the interest-rate fixing scandal.
    In the recording from 2008, obtained by the BBC’s Panorama team, one Barclays banker tells another that the central bank was pressuring huge commercial banks to keep LIBOR rates low.
    Philp, the Conservative MP for Croydon South, said the new evidence has convinced him to call publicly for reopening the TSC investigation, as the new evidence seemingly contradicts testimony from former Barclays CEO Bob Diamond and former Deputy Governor of the Bank of England Paul Tucker.
    “From the evidence that Panorama has shown me as well as from a court document in the U.S., it suggests that on two separate occasions in 2007 and 2008, that the BoE was directing Barclays to lower the LIBOR rate.”

    This post was published at Business Insider

  • Secret Recording Implicates Bank of England In Libor Rigging

    While it may seem like yesterday, it was nearly five years ago that the Libor scandal first broke, and with it brought scandalous suggestions that none other than the Bank of England was implicated.
    As we first reported in July 2012, according to Barclays then CEO Bob Diamond, it was high level individuals at the BOE who may (or may not) have been aware that Libor had been “manipulated” and were (or were not) also active in the setting process:

    This post was published at Zero Hedge on Apr 10, 2017.

  • FX Week Ahead: Highlights Include Article 50 And Sterling, Q4 GDP And The USD

    By Shant Movsesian (RANsquawk) and Rajan Dhall MSTA (RANsquawk/Tradingview)
    UK in the spotlight this week as Article 50 set to be triggered. Is this priced in to GBP? We’ll find out. The USD may start to find some support as key levels (against its major counterparts) near. Japanese year end on the Friday.
    Looking to next week, few can look past the impending triggering of Article 50 – on Wednesday – which is widely expected to produce a knee jerk hit on the Pound. Given the slow grind higher through the week, some would assume that much of this is priced in, with GBP arguably at (near term) fair value levels. The healthier mood in the Pound has been partially ‘aided’ by the BoE tone, where the majority of the MPC are warming to a rate hike closer in on the horizon. Higher than expected inflation reported this week was followed up by stronger retail sales, which went against the anecdotal evidence suggesting pressures on household income, but this will likely pass through further down the line. Cable remains inside 1.2000-1.2800 for now, so the focus could switch to EUR/GBP again.

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

  • Are Central Banks Worthy of Trust?

    In an essay on Edmund Burke’s view of the nature of government, Murray Rothbard quoted him as saying:
    In vain you tell me that Artificial Government is good, but that I fall out only with the Abuse. The Thing! The Thing itself is the Abuse!”
    Our complaint isn’t just with “abuse of the system,” it is with the system itself! The system is the abuse. Everything else is a symptom, a surface issue.
    When BOE Governor Mark Carney spoke on various banking sector abuses at the Banking Standards Board Panel, he misses the entire point. The title of the speech is ‘Worthy of trust? Law, ethics and culture in banking’ and he is concerned that such abuses have produced a “crisis of legitimacy.”
    “This immense progress has been overshadowed by a crisis of legitimacy. A series of scandals ranging from mis-selling to manipulation have undermined trust in banking, the financial system, and, to some degree, markets themselves.”
    Bad behaviour went unchecked, proliferated and eventually became the norm.

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

  • Gold Surges Most Since Brexit After ‘Dovish’ Fed Hike

    With the focus overnight on the Rutte ‘win’ despite the surge in populist angst, and headlines from The Fed, PBOC, BoJ, and BoE sending global stocks to record highs, one might be forgiven for not noticing that Gold is surging (most since Brexit) following Janet’s decision to raise rates for the 3rd time in 11 years – far outperforming other assets classes.
    The Dollar continued to get pounded overnight as China unexpectedly tightened policy…

    This post was published at Zero Hedge on Mar 16, 2017.

  • S&P Futures, Global Stocks Rise Ahead Of The Fed; Oil Rebounds

    It is fitting that just a few hours until the Fed’s second rate hike in two quarters, and one day after Goldman downgraded global stocks to Neutral for the next 3 months, not to mention with the results of the anticipated Dutch election due shortly, that global stocks as well as S&P futures are higher, while crude oil has finally managed to stage a rebound as the Dollar DXY index is fractionally in the red.
    In addition to the Fed, a barrage of monetary policy decisions at the BOE, the BOJ, the SNB and Bank of Indonesia within the next 36 hours were further reasons for investors’ cautious stance.
    East Coast traders return to their desks following a rather disapponting nor’easter, where they will be prompted bombarded by data over the next 2 days. Here is a quick summary of main events over the next 36 hours courtesy of Bloomberg:
    The Fed’s decision will be announced at 2 p.m. in Washington, followed by Chair Janet Yellen’s news conference a half hour later. Investors are focused on any hints of a change in the number of increases the central bank foresees this year. Wednesday’s vote in the Netherlands will deliver a reading on the state of populism in Europe as races in France and Germany heat up. The Bank of Japan is set to keep its rates and yield-curve policy unchanged in its policy decision on Thursday. The Bank of England, Swiss National Bank and Bank Indonesia are also expected to stand pat with policy decisions. U. S. Secretary of State Rex Tillerson travels to Japan, South Korea and China in his first visit to the region since taking office. U. S. President Donald Trump’s first budget outline for fiscal 2018 is expected on Thursday. He’s said he’ll seek a $54 billion boost in defense spending, paid for by an equal amount of cuts to non-defense agencies.

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

  • BOE Deputy Governor Resigns After Failing To Disclose Her Brother Works For Barclays

    The Bank of England’s new deputy governor of markets and banking, Charlotte Hogg, has resigned after less than five week in her post, after an MP report concluded she “fell short of the very high standards required” for the position as a result of failing to disclose that her brother works at Barclays, a bank which the BOE regulates.
    In a report published today, the Treasury Select Committee issued a strongly worded criticism of Hogg: “The Committee considers that her professional competence falls short of the very high standards required to fulfil the additional responsibilities of Deputy Governor for Markets and Banking.” The TSC said Hogg’s failure to inform the Bank that her sibling worked at a bank she would be regulating ‘raises wider concerns about BoE transparency’ and called for further reform of the BoE’s internal court.
    Hogg voluntarily tendered her resignation, which BOE governor Mark Carney accepted saying he “deeply regretted” the decision:
    “While I fully respect her decision taken in accordance with her view of what was the best for this institution, I deeply regret that Charlotte Hogg has chosen to resign from the Bank of England.
    Since Charlotte joined the Bank almost four years ago, she has transformed its management and operations.
    The Bank of England today is stronger, more diverse, secure and effective in large part because of Charlotte Hogg. We will do everything we can to honour her work for the people of the United Kingdom by building on her contributions.”

    This post was published at Zero Hedge on Mar 14, 2017.

  • A Chink of Light into London’s Gold Vaults?

    On 5 February, the Financial Times of London (FT) featured a story revealing that the London Bullion Market Association (LBMA) plans to begin publishing data on the amount of real physical gold actually stored in the London precious metals vaulting network. The article titled ‘London gold traders to open vaults in transparency push’ can be read here (accessible via FT subscription or via free monthly FT read limit).
    This new LBMA ‘monthly vault data’ will, according to the FT’s sources, be published on a three-month lagged basis, and will:
    ‘show gold bars held by the BoE, the gold clearing banks, and those [vaults] operated by the security companies such as Brink’s, which are also members of the LBMA.’
    The shadowy source quoted in the FT article is attributed to ‘a person involved in setting up the programme’, but at the same time, although ‘the move [to publish the data] is being led by the LBMA’, the same LBMA ‘declined to comment’ for the FT story. This then has all the hallmarks of a typical authorised leak to the media so as to prepare the wider market for the data release.
    On 16 February, the World Gold Council in its ‘Gold Investor, February 2017′ publication features a focus box on the same gold vault topic in its ‘In the News’ section on page 4, where it states:
    ‘Enhanced transparency from the Bank of England
    The Bank of England is, for the first time, publishing monthly data revealing the amount of gold it holds on behalf of other central banks.
    As a leading custodian of gold, with one of the largest vaults in the world, the Bank of England’s decision is highly significant. Not only will it enhance the transparency of the Bank’s own gold operations; it will also support the drive towards greater transparency across the gold market.
    The data reveals the total weight of gold held within the Bank of England’s vaults and includes five years of historical data.’
    The Proposed Data
    Based on these two announcements, it therefore looks like the gold vault data release will be a combined effort between the LBMA and the Bank of England, the blood brothers of the London Gold Market, with the Bank of England data being a subset of the overall LBMA data. While neither of the above pieces mention a release date for the first set of data, I understand that it will be this quarter, i.e. sometime before the end of March. On a 3 month lagged basis, the first lot of data would therefore probably cover month-end December 2016, because that would be a logical place to start the current dataset, rather than, for example, November 2016.

    This post was published at Bullion Star on 17 Feb 2017.

  • BOE Says Corporate-Bond Buying Program May End Ahead of Schedule

    The Bank of England said it may finish a 18-month corporate-bond buying program ahead of schedule because investors are more willing to sell than expected.
    ‘It seems probable that the bank will be able to complete the purchase program faster than we thought possible,’ Chris Salmon, the central bank’s executive director for markets, said in a January 24 speech in London. This may be because BOE buying has boosted secondary-market liquidity ‘by more than we had allowed for,’ he said.
    The central bank has already used more than half its 10 billion ($13 billion) bond-buying budget since starting purchases about four months ago to support the U.K. economy following a vote to leave the European Union. It may soon face the challenge of how to cool quantitative easing without sparking a market slump.
    ‘We are concerned about who will buy the market post-BOE,’ HSBC Holdings Plc credit strategists led by Jamie Stuttard wrote in a note to clients this week. ‘No central bank has ever tapered corporate bonds.’

    This post was published at bloomberg

  • Apple Hikes UK App Store Prices By 20% In Response To Plunging Pound

    Ahead of Theresa May’s speech, which catalyzed the biggest jump in sterling since 2008, the signs were already there that the British currency is facing upward pressure when December U. K. inflation was reported to have accelerated to the fastest pace in more than two years, driven by the tumbling pound which drove a surge in import costs. Consumer-price growth increased to 1.6 percent, the highest since July 2014, from 1.2 percent in November, and above the 1.4% consensus estimte. A separate report showed the cost of imports soared at the fastest annual rate in more than five years according to Bloomberg.

    On Monday, BOE’s Mark Carney warned on Monday that rapidly accelerating inflation will put the brakes on consumer spending this year following sterling’s 18 percent depreciation since the Brexit vote. The BOE, which will publish new projections next month, currently expects inflation to breach its 2 percent target soon. It sees the rate pushing close to 3 percent by the end of the year, while some forecasters see it even higher than that. ‘This is very much the thin end of the wedge and there is plenty more upside to come over the coming months,’ said Alan Clarke, an economist at Scotiabank. ‘We suspect that the bank will turn more hawkish.’ It is unclear if that means that the BOE may consider hiking: according to Goldman, not only will the BOE not raise rates for the next two years, but will actually engage in further easing in the not too distant future.

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