It’s time to recap
Expectations of an interest rate hike in the UK jumped today after the Governor of the Bank of England issued yet another warning about inflationary pressures.
The markets are now anticipating a rate hike of 0.1% to 0.25% as of November. It would be the first increase in borrowing costs since the pandemic, with a discount rate of 1% by summer 2022.
The yield, or interest rate, on UK two-year bonds hit their highest level since May 2019, another sign that traders were quickly reassessing the prospects for a rate hike in 2021.
The move came after Andrew Bailey told the G30 central banker group that the BoE will need to act if it sees a risk of medium-term inflation and medium-term inflation expectations.
Markets are now anticipating a November hike to around 85%.
Rightmove reported that asking prices for homes rose this month as buyers and sellers tried to anticipate moves before interest rates rose.
China’s economy has stumbled as power outages, supply chain issues and a slowdown in its real estate sector all weigh on growth.
China’s GDP grew only 4.9% year-on-year in the last quarter, and only 0.2% on a quarterly basis.
Fu Linghui, spokesperson for the National Bureau of Statistics, said at a press conference that:
“After entering the third quarter, risks and challenges at home and abroad increased as the pandemic continued to spread and the global economic recovery slowed.”
The growth report showed that:
- Growth in industrial production slowed to 3.1% in September.
- Growth in capital investment fell short of plan, increasing 7.3% in the first nine months compared to a year ago.
- Retail sales rose 4.4% in September; the median forecast was 3.5%
- The unemployment rate fell to 4.9% at the end of September
US factories were also disappointing, with industrial production falling 1.3% in September, as chip shortages and hurricane disruptions affected production.
These semiconductor shortages and transport problems are also hitting the Dutch electronics giant Philips, which said “chips and ships” had hampered its growth in the past quarter.
Equity markets have been hit by concerns about the Chinese economy, supply chain issues and rising inflation. Wall Street fell, after losses in Europe and Asia.
Brent crude hit a new three-year high at $ 86 a barrel, while UK wholesale gas prices rose after hopes of a gas surge from Russia faded.
In other news …
Nightclubs are suffering from a growing shortage of bouncers, in the last downsizing to hit the UK’s economic recovery, with some estimates suggesting venues need to pay security staff up to 25% more.
The lack of security personnel comes at a time when hotel businesses are hit by a cocktail of rising costs and are trying to bounce back from months of shutdowns during the pandemic.
The UK Manufacturers Trade Body has hit back at ministers’ accusations that companies have relied on cheap foreign labor for too long, urging them to partner with companies instead of seeing them ‘as the’ enemy within ”.
Ford has announced that it will invest £ 230million in a Merseyside transmission plant to modernize it and manufacture parts for electric vehicles, which represents a major boost for the automotive industry in the north of England.
Justin benson, partner and specialist in the automotive sector at the management consulting firm, Vendigital, says this is an “important step”, but points out that the UK needs more “giga-factories” to produce electric batteries:
“Following Nissan’s announcement to invest in the Gigafactory earlier this year, Ford’s decision is a major step in the UK automotive industry’s journey towards a zero-emissions future. It is also a seal of approval for foreign investors, signaling their confidence in the UK’s position within the global electric vehicle industry.
“Other car manufacturers. like JLR, also have well-known plans to meet clean air and zero emissions regulations by switching to electric vehicles over the next five years. As such, we’ll likely see more automakers follow in Ford’s footsteps in the near future.
“However, while these kinds of announcements bode well for the UK’s net zero transition, it’s important to keep in mind that a significant investment in Gigafactories will also be vital. This will be the next big challenge for the government and will be essential in leveling the playing field with other major electric vehicle manufacturing centers. “
Facebook is creating 10,000 jobs in the EU as part of its drive to create a virtual world for its users.
The company has proclaimed the ‘metaverse’ as the next big phase of growth for big tech companies and recently announced a $ 50million (£ 36million) investment program to ensure this meta-world is built. “Responsibly”.
Matthieu Moulage, the founder and managing director of The Hutte Group, is giving up its “golden” share of the company in an attempt to regain the City’s confidence after a sharp drop in shares in recent weeks.
Good evening. GW