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14 Aug 2013
Flash: BoE vs Markets—Who Wins? – TD Securities
FXstreet.com (Barcelona) - Cristian Maggio, Senior Emerging Markets Strategist, Rates and FX Research at TD Securities said the BoE is going to be watching closely for signs as to why rates are heading higher.
Key Quotes:
”…we’ve seen an unusually strong string of economic data, which is leading markets to re-evaluate their views on UK growth prospects, and that’s something that the BoE will be more willing to let run, to an extent”.
“If rates rise more than macro fundamentals support though, and begin to weigh on the recovery via higher mortgage and borrowing rates, then the BoE is clearly open to doing further QE.”
“At this point though, and until we get a couple of decent downside data surprises, it’s going to be tough to fight the markets, and the BoE may have to sit back and watch”.
“The next opportunity for a move lower in rates is tomorrow’s UK retail sales report, where we see downside risks, and look for a flat reading compared to market expectations for a +0.6% gain in July. It may take more than one soft print though to dampen the market’s enthusiasm, and it will be very interesting to see how Governor Carney characterizes the move at his speaking appearance on 28 August, where he’ll have chance to address how markets have reacted to his new policy”.
Key Quotes:
”…we’ve seen an unusually strong string of economic data, which is leading markets to re-evaluate their views on UK growth prospects, and that’s something that the BoE will be more willing to let run, to an extent”.
“If rates rise more than macro fundamentals support though, and begin to weigh on the recovery via higher mortgage and borrowing rates, then the BoE is clearly open to doing further QE.”
“At this point though, and until we get a couple of decent downside data surprises, it’s going to be tough to fight the markets, and the BoE may have to sit back and watch”.
“The next opportunity for a move lower in rates is tomorrow’s UK retail sales report, where we see downside risks, and look for a flat reading compared to market expectations for a +0.6% gain in July. It may take more than one soft print though to dampen the market’s enthusiasm, and it will be very interesting to see how Governor Carney characterizes the move at his speaking appearance on 28 August, where he’ll have chance to address how markets have reacted to his new policy”.