Thursday, November 11, 2010
Rates to Rise: Yippee!!!!!!
All eyes were on the Bank of England's Quarterly Inflation Report today. It gives a rare and candid insight into how Britain's prinicipal rate-setters view the wider economy - and what they might do with rates in reaction. In the world of interest rates futures, what they said today was pretty explosive. These 'swap' markets, where banks borrow money, give an indicator of shifting sentiment on when rates will move. The five-year swap, which traded as low as 1.98% in October leapt from 2.13% before the report's publication to 2.25% several hours later. Such a large swing is rare