Friday, July 1, 2016

Summer tipped for rate cut by Governor as he pledges he won’t “walk away” from the job

Brexit: Bank of England Governor signals interest rate cut

He may end up getting kicked out. So, my long predicted rate cut is about to come to pass. Expectations are that it will be a 25bp cut to 0.25%. However, 2yr Gilts are being bid up bigly, to quote the next President of the USA, with rates collapsing on those to 0.105% I am expecting these to fall into negative territory forcing the BOE, which reacts to and competes with the market and is not in control, to cut to 0%, followed by negative rates to come as Britain becomes a safe haven whilst the EU becomes the focus of short positions and disintegration concerns. House prices are about to soar as this combines with FOREX house price discounts to foreigners who will flood in to front run border controls.

Posted by libertas @ 03:11 AM (6639 views)
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10 thoughts on “Summer tipped for rate cut by Governor as he pledges he won’t “walk away” from the job

  • I am tracking the 2yr rate here. Change the number to find different Gilts. The 50yr is plummeting:
    http://uk.investing.com/rates-bonds/uk-2-year-bond-yield-streaming-chart

    This, and not Carneys propaganda, is what will lead because the market and not the BOE are in control. Everything else from Carney is smoke and mirrors that form a confidence game.

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  • cornishman says:

    “…2yr Gilts are being bid up bigly…”

    Things that are bid up bigly have a habit of going back down even more bigly shortly afterwards.

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  • Good news for people with big mortgages and landlords. Bad news for everyone else, i.e. the majority of people.

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  • cheesypeas says:

    Do you think that overseas speculators actually want to move the UK? Or that they will wait for the pound to drop even further? There is no safe haven status while risks are attached to the pound. FDI is falling and will continue to do so into 2018.

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  • Libby – Since Brexit the share price of Countrywide EA is -31%, Foxtons EA -34%, Barratt house builders -30% and Bovis house builders -28%. The FTSE 250 market (the best market to compare to) is approx -6%.

    So even though the market is aware of upcoming rate reduction probabilty, their read on where the house building and house selling markets are heading due to Brexit is dire. Perhaps you could explain why you disagree with the markets so much.

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  • They are bargains @5. I would be a buyer. Had you purchased bank stocks just after 2008 crash you would be loaded now.

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  • One of the theories that the shares are down is because of scare tactics that housing demand is going to diminish because of tighter immigration so people can’t work and won’t buy a property, I can’t see the demand for houses diminishing anytime soon and if it did then this would in theory result in lower prices which isn’t a bad thing and house builders should still be making money if they are pricing the houses based on the lower valuations of costs.

    It seems that the BOE is ready to prop this market up for at least the short/medium term and after the dust has settled on the brexit vote I would expect the stocks to regain their losses at least until the next dramatic vote/action. I think the house builders offer good value but not so much the estate agents.

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  • Lets also not forget that with all this smoke that the government hasn’t submitted the notice to leave yet and is delaying it on purpose, who would think that electing the next prime minister isn’t important enough to hold an emergency meeting and instead we must wait 2-3 months!

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  • I agree with Boris that Britain is gripped by post-Brexit hysteria, literally traumatised by the propaganda of project fear.

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  • Negative rates don’t work the way most expect. See werner/ the Swiss experience.

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