Daily update
Daily update
- Financial markets remain displeased with the UK government. US Federal Reserve President Bostic warned that UK-inspired uncertainty risked a global recession. Popular attention focuses on the weakness of sterling; every tourist can understand exchange rates. Memories of the ERM debacle mean emergency rates to defend sterling are unlikely, but more aggressive scheduled rate hikes are coming.
- Bonds may be more concerning than currency moves—2-year UK yields rose over 1% in two days. UK mortgage products are being withdrawn in anticipation of higher interest rates. A large number of UK mortgages reset their rates within two years, risking a higher cost of living. Bank of England Chief Economist Pill speaks today; even a Chief Economist can only do so much damage control.
- US mortgage rates are also rising. As nearly all US mortgages are fixed rate, that does not bother existing borrowers. It does affect new home buyers. House price data today is expected to show stagnating prices. Durable goods orders and consumer confidence are also due.
- There are several other central bank speakers, including US Federal Reserve Chair Powell (on digital currencies). ECB speakers follow ECB President Lagarde’s commenting yesterday that they did not know where neutral interest rates lay, but they were going to get there nonetheless.
