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19 minutes ago, zugzwang said:

Construction industry officially in recession. Rate hike cancelled. ;)

Wait till the budget, will Hammond bring in more HTB?

Edited by Tiger131

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Just now, TheCountOfNowhere said:

Everything bar the construction industry is calling out for a rate hike :lol: 

:lol:

I'm firmly in the 'believe it when I see it' camp.

 

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26 minutes ago, Tiger131 said:

Wait till the budget, will Hammond bring in more HTB?

Recession in construction yet huge profits for Lloyds this morning? That doesn't compute. Not unless you factor ~£100bn in helicopter money that the BoE has quietly lavished on the City of London in the past year.

The Term Funding Scheme expires in Feb 2018. It's unlikely to be extended because it distorts the RMBS market too much (below). But the fiscal stimulus it's given to the financial sector (and the economy generally) can't be withdrawn without causing a recession.

So Hammond is going to open up the spending taps again, for sure. And more HtB is certainly an option.

https://twentyfouram.com/2017/08/18/end-term-funding-scheme-party/

Quote

By way of recap, the TFS was introduced alongside the 25bps base rate cut last August in order to encourage banks to pass-on that rate cut, by providing term funding to the banks at rates close to the base rate.

The good news for the BoE is that it has worked – in fact it’s more than worked!

Mortgage rates are now at pretty much all-time lows; the average cost of a fixed rate mortgage has in fact fallen by 34bps in the last year according to the Council of Mortgage Lenders, and the average rate is down by 32bps. Furthermore, the banks have embraced the scheme, utilising £78bn so far according to the BoE, who expect the scheme could grow to up to £115bn by the time it finishes. They did have the option to extend the scheme but have chosen to close it as originally scheduled, which indicates they think it has done its job.

There has however, been a reverse knock-on effect for the capital markets.  With all that cheap funding available, banks have been borrowing less from the bond markets and therefore issuance of senior unsecured debt, covered bonds and in particular RMBS has fallen. Outstandings of UK Bank and Building Society RMBS have fallen by about 70% since the beginning of 20161, as issuers have allowed existing deals to run off and most likely replaced them with TFS funding instead.

There is thankfully, every expectation that once the TFS ends, issuance patterns will gradually return to normal levels, but this is likely to take a while because the TFS has provided the banks with 4 year funding so there will be no hurry to replace it. However, it is worth remembering that prior to TFS banks also had the BoE’s previous programme, the Funding for Lending Scheme (FLS) which began in 2012, so the loans from that will be coming up to maturity sooner and will of course need financing.

We’ve commented on the current technical factors that are driving the supply and demand imbalance in the ABS markets on numerous occasions over recent years, and this is just one of those factors alongside other direct QE such as the ECB’s ABS Purchase Programme and TLTROs as well as the central banks’ discount window repo facilities. Whilst we are far from the end of the road, the confirmation that the TFS has done its job and is coming to an end is at least a sigh of welcome relief for the RMBS market in that more regular issuance may gradually return, giving investors a renewed opportunity to gain exposure to one of the safest, and best performing asset classes in fixed income.

 

 

Edited by zugzwang

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That's really surprising given the state of the Brexit talks and  the fact that politicians on all sides ..... Corbyn, Hammond, Cable are talking down the Uk economy to such an extent that you would have thought the majority of the population had all ready started battening down the hatches and started sucking marrow for food because clearly we are all doomed. Perhaps it suits mortgagees, especially, to talk down the economy so they get zirp forever.

Edited by crashmonitor

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No, you're not reading it correctly.

UK economy sinking faster than Syria.

Hordes of st7arving children in the street, rummaging in bins.

Carney doing all he can to stop the UK slipping further into 3rd world ....

 

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5 minutes ago, spyguy said:

No, you're not reading it correctly.

UK economy sinking faster than Syria.

Hordes of st7arving children in the street, rummaging in bins.

Carney doing all he can to stop the UK slipping further into 3rd world ....

 

Jeese, Surrey has gone to the dogs.

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5 minutes ago, spyguy said:

No, you're not reading it correctly.

UK economy sinking faster than Syria.

Hordes of st7arving children in the street, rummaging in bins.

Carney doing all he can to stop the UK slipping further into 3rd world ....

 

Reminds me of this Gem

 

http://metro.co.uk/2017/03/27/children-are-getting-high-by-sniffing-burning-wheelie-bins-6535684/

 

Kids cant even afford glue these days.

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IMO they're mucking about with the GDP deflator.

And the reason why they're doing this is because they need to increase interest rates (as a result to geopolitical drivers) but have to pretend that it is merely responding to changes in the UK economy.

Edited by dgul
to add a bit

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Clearly a bad day anyway for the Remain ultras, Philip Hammond and the BBC. This was supposed to be the day for revelling in gloom and showing what a load of f%%kwits the Leave voters were. Still they have a got a  good reserve story, a nurse has come back from a New York shopping trip and has had recourse to a foodbank.

Edited by crashmonitor

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59 minutes ago, crashmonitor said:

That's really surprising given the state of the Brexit talks and  the fact that politicians on all sides ..... Corbyn, Hammond, Cable are talking down the Uk economy to such an extent that you would have thought the majority of the population had all ready started battening down the hatches and started sucking marrow for food because clearly we are all doomed. Perhaps it suits mortgagees, especially, to talk down the economy so they get zirp forever.

It’s a just temporary boost to the figures due to all the Remain Ultras preppers stocking up on champagne, chocolate, tulips and beemers.

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1 hour ago, zugzwang said:

Construction industry officially in recession. Rate hike cancelled. ;)

That is exactly how it works......in any given month there will always be at least one less than ideally desired economic indicator which can be pointed to and used as the excuse for not raising rates.

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1 hour ago, zugzwang said:

Recession in construction yet huge profits for Lloyds this morning? That doesn't compute. Not unless you factor ~£100bn in helicopter money that the BoE has quietly lavished on the City of London in the past year.

 

Re Lloyds, which corporate?

Quote

 

Impairment charges for bad loans rose 20% to £539m but Culmer said this was not caused by a deterioration in consumers’ ability to repay loans but a “single large corporate” running in to trouble.

https://uk.finance.yahoo.com/news/britain-apos-ready-interest-rate-102511328.html

 

 

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50 minutes ago, Democorruptcy said:

Re Lloyds, which corporate?

 

Lloyds bank announced profits of 6.6 billion for the first 9 months largely due to the falling off of PPI claims.  I guess there can't be much profit on current loan spreads under zirp. Probably makes a packet out of acquiring charges for debit and credit cards,  taking a cut in a large percentage of UK retail transactions.

Anyway,  it must be doomed, with a market cap of 48 billion, at this rate the price to earnings is going to end up at about five for 2017....wouldn't get a cheaper stock in an African dictatorship. Starvation and economic ruin as per Remain ultras is priced in. Best stock up on Multi nationals at fifty time p/e...the Royal Dutch Shells and Glaxos of this world.

Edited by crashmonitor

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9 hours ago, zugzwang said:

:lol:

I'm firmly in the 'believe it when I see it' camp.

 

Yes... not w/o a reason the probability of the rate hike is  circa 85% rather than full 100% as of today. It's sort of baked in, but... I would be amazed if they don't do it, but not surprised. Let's see if the majority of the MPC have a deluded sense of grandeur in front of Mr.Market, but speculation is the vote is  going to be 7-2 to hike. We shall see...

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10 hours ago, dgul said:

IMO they're mucking about with the GDP deflator.

And the reason why they're doing this is because they need to increase interest rates (as a result to geopolitical drivers) but have to pretend that it is merely responding to changes in the UK economy.

^ this.

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  • 296 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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