Spreadex Market Update
Markets wary ahead of UK inflation figures; Spain, Austria and Estonia to vote on Greek bailout
Following ‘Super’ Thursday, where Ian McCafferty was the sole committed hawk in the Monetary Policy Committee, Kristin Forbes and David Miles have both come forward with their own pro-lift off comments. Add these to Mark Carney’s belief that rates will rise not long after the New Year, and the UK is entering US territory, i.e. the perpetual hand-wringing over every piece of rate hike relevant data.
You can’t get much more interest rate relevant than this morning’s inflation figures; yet despite it being the UK’s moment in the data sun this week, they aren’t likely to spark too much excitement. The Bank of England and analysts alike are expecting the figure to remain at zero for the next two months, as the commodity collapse and strengthening sterling continue to cause deflationary pressures. Yet investors are still being cautious, and combined with the latest China-inspired declines in its oil and mining stocks the FTSE was fairly flat at the open; the pound, meanwhile, could see some movement if the CPI data surprises.
The Eurozone was similarly limp this morning, even if progress on the third Greek bailout remains positive. Spain, Estonia and Austria are all likely to pass the deal this Tuesday, leaving focus firmly on Wednesday’s German vote. On TV last night Schauble put his considerable clout behind the deal in an attempt to mitigate the sizable CDU/CSU rebellion that is expected to occur in the Bundestag tomorrow, a far cry from his bridge-loan favouring stance last week.
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