Rate tops level last seen after Liz Truss mini-budget as fears of global inflation and US political instability spook markets
Britain’s long-term cost of borrowing has hit its highest level since 1998, as political instability in the US and fears of sustained high levels of inflation triggered a sell-off in global bond markets.
The yield, or interest rate, on 30-year UK government bonds hit 5.115% early on Wednesday, according to the financial data provider Refinitiv.
Continue reading...US unemployment rate held steady at 3.6%, labor department said, as jobs report indicated resilience
The US economy added 372,000 jobs in June, an indicator of resilience despite signs of slowing economic growth.
The jobs reports is seen as a key indicator on whether high inflation – and central bank efforts to tame it with interest rates rises – is beginning to bite down on the wider American economy.
Continue reading...Federal Reserve expected to increase cost of borrowing by 0.75 percentage points to curb rising inflation
The world’s financial markets are bracing themselves for the sharpest rise in US interest rates in almost 30 years, as America’s central bank takes action to halt rising inflation.
After days of frenzied investor speculation and signs of growing central bank anxiety, the Federal Reserve is expected to increase the official cost of borrowing by 0.75 percentage points for the first time since 1994.
Continue reading...FTSE 100 posts biggest daily gain for over a month as investors buoyed up by vaccine and US economy hopes
The pound has hit its highest level against the dollar for almost three years as global markets were buoyed up by hopes for a faster economic recovery from the coronavirus pandemic.
Sterling rose by 0.5% to hit a 33-month high against the dollar on Monday, trading above $1.39 on the global currency markets for the first time since 2018, while also rising to a nine-month high against the euro of almost €1.15.
Continue reading...World economic outlook says 2020 impact is less than thought but there will be deep scars
The International Monetary Fund has scaled back its estimate of the hit to the global economy from Covid-19 this year but warned that the final bill for the pandemic would total $28tn (£21.5tn) in lost output.
Gita Gopinath, the IMF’s economic counsellor, described coronavirus as the worst crisis since the Great Depression, and said the pandemic would leave deep and enduring scars caused by job losses, weaker investment and children being deprived of education.
Continue reading...Rolling live coverage of business, economics and financial markets as investors anticipate new approach to inflation
Something to sink your teeth into before lunch: more discounts on dining out.
Related: Eat out to help out scheme to be extended by some restaurants
Mark Haefele, chief investment officer, UBS Global Wealth Management, said:
While we expect the Fed to shy away from more radical easing measures, such as explicit controls on government bond yields, we believe Powell will likely outline other dovish measures. These could include a move toward average inflation targeting, giving the central bank more leeway to allow inflation to overshoot the 2% target while keeping rates pegged close to zero.
Maybe the age of the independent, activist central bank head is also coming to an end. Fiscal policy is more powerful and monetary policy needs to work in harmony with it. Monetary policy is being asked to do things (like tackle economic inequality) that it really isn’t suited to. But, here we are, waiting for Jay Powell to turn up at Grafton’s Saloon. He’s already done everything he can, he’s almost out of bullets and he may even have already won the fight, but we have placed our faith in him and desperately want fresh encouragement.
Continue reading...Investors shrug off US growth gloom after promising data from remdesivir drug trial
Shares have soared on the world’s stock markets after investors shrugged off a deep slump in the US economy and pinned their hopes on a possible breakthrough in treatment for Covid-19.
Despite news that the longest expansion in US history came to an abrupt end in the first three months of 2020, financial markets were buoyed by an update from the American biopharma company Gilead Sciences on its experimental drug remdesivir.
Continue reading...World economy’s prospects look bleak owing to Covid-19 outbreak and Donald Trump’s trade policy
At the start of this year, things seemed to be looking up for the global economy. True, growth had slowed a bit in 2019: from 2.9% to 2.3% in the US and from 3.6% to 2.9% globally. Still, there had been no recession and as recently as January, the International Monetary Fund projected a global growth rebound in 2020. The new coronavirus, Covid-19, has changed all of that.
Early predictions about Covid-19’s economic impact were reassuring. Similar epidemics – such as the 2003 outbreak of severe acute respiratory syndrome (Sars), another China-born coronavirus – did little damage globally. At the country level, GDP growth took a hit but quickly bounced back, as consumers released pent-up demand and firms rushed to fill back orders and restock inventories.
Continue reading...Past crashes spawned new thinking and reform but nothing has changed since 2008 banking meltdown, says former Bank of England boss
The world is sleepwalking towards a fresh economic and financial crisis that will have devastating consequences for the democratic market system, according to the former Bank of England governor Mervyn King.
Lord King, who was in charge at Threadneedle Street during the near-death of the global banking system and deep economic slump a decade ago, said the resistance to new thinking meant a repeat of the chaos of the 2008-09 period was looming.
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