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Time to recap
Expectations for a rate hike in the UK have skyrocketed today after the Bank of England Governor warned again of inflationary pressures.
The markets are now pricing in an interest rate hike from 0.1% to 0.25% as early as November. This would be the first hike in borrowing costs since the pandemic, with the bank rate at 1% through summer 2022.
The yield, or interest rate, on UK two-year bonds jumped to its highest level since May 2019, another sign that traders are quickly rethinking the prospect of a rate hike in 2021.
The move came after Andrew Bailey told the G30 group of central bankers that the BoE must act if it sees a risk of medium-term inflation and inflation expectations.
The markets are now pricing in a November increase of around 85%.
Rightmove reported that asking prices for property have rebounded this month as buyers and sellers try to pin moves before interest rates rise.
China’s economy has faltered as power outages, supply chain problems and the downturn in the real estate sector weigh on growth.
China’s GDP grew just 4.9% year over year in the most recent quarter, and only 0.2% on a quarterly basis.
Fu Linghui, Speaker of the National Statistical Office, said at a press conference:
“After entering the third quarter, domestic and international risks and challenges have increased as the pandemic continues to spread and global economic recovery slows.”
The growth report showed that:
- Industrial production growth slowed to 3.1% in September.
- Fixed investment growth missed forecast and rose 7.3% year over year in the first nine months.
- Retail sales rose 4.4% in September; Median forecast was 3.5%
- The unemployment rate fell to 4.9% at the end of September
The US factories also disappointed: industrial production fell 1.3% in September as chip shortages and hurricane disruptions affected production.
These semiconductor shortages and transport problems also affect the Dutch electronics giant Philips, who said “Chips and Ships” had hurt growth in the most recent quarter.
Equity markets were hit by concerns about China’s economy, supply chain problems and rising inflation. Wall Street fell after losses in Europe and Asia.
Brent crude hit a new three-year high of $ 86 a barrel, while wholesale gas prices in the UK rose after hopes of a surge in gas from Russia faded.
In other news …
Nightclubs suffer from a growing shortage of bouncers as recent staff shortages hurt the UK’s economic recovery.
The security shortage comes at a time when hospitality businesses are hit by a cocktail of rising costs and are trying to recover from months of closings during the pandemic.
The UK Manufacturers ‘Association has fought back ministers’ allegations that companies have relied on cheap foreign labor for too long and urged them to work with business instead of viewing them “as an enemy within”.
Ford has announced that it will invest £ 230 million in a transmission factory in Merseyside to upgrade it to produce parts for electric vehicles, a major achievement for the automotive industry in the north of England.
Justin Benson, Partner and industry specialist automotive at management consulting, Vendigital, says it is a “major milestone” but indicates that the UK needs more “gigafactories” to make electric batteries:
“Following the announcement of its investment in Nissan’s Gigafactory earlier this year, Ford’s decision marks an important milestone in the UK automotive sector’s journey towards a zero emissions future. It’s also a stamp of approval from overseas investors signaling their confidence in the UK’s position in the global EV industry.
“Other automakers. B. JLR also have well-publicized plans to move to clean air and zero emissions over the next five years by moving to electric vehicles. Hence, we are likely to see more automakers following in Ford’s footsteps in the near future.
“While these types of announcements bode well for the UK’s net zero transition, it’s important to remember that a significant investment in gigafactories will also be crucial. This will be the next big challenge for the government and it will be the key to comparing the playing field with other large production centers for electric vehicles. “
Facebook creates 10,000 jobs in the EU to build a virtual world for its users.
The company has named the Metaverse as the next big growth phase for large tech companies and recently launched a $ 50 million investment program.
Matthew Molding, the founder and managing director of The hut group, gives up his “golden” stake in the company to regain confidence in the city after a sharp drop in shares in recent weeks.
Good night. GW
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