Pretty quiet this last week in the UK really, with few economic releases
of any substance - lacklustre retail sales figures, mixed CBI surveys,
(orders better than expected, but sales worse), the Prime Minister even
felt able to return to his holiday!
On balance, sterling suffered a little against the dollar and the euro, falling by about 1% against both - maybe because the pound has become a newly annointed safe-haven currency over the recent frenzied months, due to the UK's apparent strict fiscal probity, and this week safe havens of many types were ditched as hopes for QE3 grew, taking equities tentatively higher.
I would be tempted to fade these moves as, even if Bernanke does signal that QE3 is just around the corner, we'll see a very graphic example of the law of diminishing returns, as I believe the market will quickly re-focus upon the Eurozone debt disaster waiting to happen. If he doesn't deliver, and just does the minimum - which will be a verbal guided tour through the various easing options at the Fed's disposal should they need them - then it's 'goodnight Vienna'; risk will be spurned like a rabid dog, and Sterling will be off to the races again.
We're still in a deflationary, debt-trapped world in the West, with the UK being a prime example, and this time next year we'll look back longingly on 2.7% gilt yields.
Tomorrow should be a humdinger of a day, with UK GDP figures, (the Office for National Statistics' second guess, so shouldn't surprise) and, of course, Bernanke on stage tomorrow late afternoon UK time - a must-watch, but I can't see him changing the world by too much, for too long.
On balance, sterling suffered a little against the dollar and the euro, falling by about 1% against both - maybe because the pound has become a newly annointed safe-haven currency over the recent frenzied months, due to the UK's apparent strict fiscal probity, and this week safe havens of many types were ditched as hopes for QE3 grew, taking equities tentatively higher.
I would be tempted to fade these moves as, even if Bernanke does signal that QE3 is just around the corner, we'll see a very graphic example of the law of diminishing returns, as I believe the market will quickly re-focus upon the Eurozone debt disaster waiting to happen. If he doesn't deliver, and just does the minimum - which will be a verbal guided tour through the various easing options at the Fed's disposal should they need them - then it's 'goodnight Vienna'; risk will be spurned like a rabid dog, and Sterling will be off to the races again.
We're still in a deflationary, debt-trapped world in the West, with the UK being a prime example, and this time next year we'll look back longingly on 2.7% gilt yields.
Tomorrow should be a humdinger of a day, with UK GDP figures, (the Office for National Statistics' second guess, so shouldn't surprise) and, of course, Bernanke on stage tomorrow late afternoon UK time - a must-watch, but I can't see him changing the world by too much, for too long.
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