Welcome to the latest financial and markets update. This blog post provides a comprehensive overview of the current economic landscape, including key interest rates, precious metal prices, government bond yields, and exchange rates. Let’s dive into the details.
Bank of England Base Rate
The Bank of England’s Monetary Policy Committee (MPC) reduced the base rate to 5.00% as of their latest meeting on 19th August. With the next meeting due on 19th September 2024 This decision was made with a majority vote of 8-1, reflecting a finely balanced stance on monetary policy. Traders are now anticipating a potential rate cut in August, with money market pricing indicating a nearly 50% chance of this occurring.
USA Federal Reserve Base Rate
The Federal Reserve has delayed its rate-cutting pathway, maintaining a cautious approach to monetary policy. The next interest rate decision is scheduled for September 24, which will provide further insights into the Fed’s stance on interest rates, which currently stands at 5.25 to 5.50%. With Forbes forecasting that the US rate is likely to end the year at 4.25 to 4.5 %
https://www.forbes.com/markets-firmly-expect-the-fed-to-cut-rates-on-september-18/
The UK financial times reports “Investors are pouring cash into US government bond exchange traded funds as bond fever spreads through the market ahead of the Federal Reserve’s expected interest rate cut in September. BlackRock’s TLT, the biggest ETF tracking long-dated Treasury bonds, pulled in nearly $4bn between the start of August and this Monday, according to data from Morningstar. The fund has had bigger inflows in only three months since it launched in 2002”.
European Central Bank Base Rate
The European Central Bank (ECB) has increased its inflation forecasts for the rest of the year, indicating a more hawkish stance compared to other central banks. This suggests that the ECB may continue to maintain or even raise its base rate to combat inflationary pressures, which currently stands at 3.75% for deposits. In their July press release the ECB stated ”
18 July 2024
The Governing Council today decided to keep the three key ECB interest rates unchanged. The incoming information broadly supports the Governing Council’s previous assessment of the medium-term inflation outlook. While some measures of underlying inflation ticked up in May owing to one-off factors, most measures were either stable or edged down in June. In line with expectations, the inflationary impact of high wage growth has been buffered by profits.”
Current Gold and Silver Prices
As of late August 2024, the price of gold is trading at £1911.38 per troy ounce, reflecting a 21.45% increase since the beginning of the year. Gold prices have been benefiting from near-term political uncertainty and are delivering returns akin to a risk asset. In comparison.
The current silver price is £22.36 per ounce, showing a significant rise of 15.27% rise since the beginning of the year.
UK Government Gilts and Bonds
The current best price of UK government gilts and bonds, in terms of the highest yield return, is around 2.75%. The Bank of England’s base rate decisions and market expectations for future rate cuts will significantly influence gilt yields.
Gilts continue to be a vital indicator against other stronger yielding, but less stable assets such as property, real estate, and Auction trading. As at today The United Kingdom 10-Year Government Bond currently offers a yield of 3.944%. This yield reflects the return investors can expect if they hold the bond until maturity. When measuring the yield, risk and viability of other assets, Government bond yields continue to be critical indicators of economic confidence and investor sentiment.
Worldwide Exchange Rates
Dollar to Pound
The British pound has made up some of its losses against the U.S. dollar, trading today at $1.3168 as of 30th August 2024. This reflects ongoing market adjustments to interest rate expectations and economic data.
Pound to Euro
The current exchange rate of the Euro to the Pound is 0.8413. However, the broader economic context and central bank policies will continue to influence this exchange rate.
Yen to Dollar
The value of the Japanese yen has plummeted to its lowest level against the dollar in 38 years, currently standing at 145 Yen to the US Dollar.
Latest FTSE Shares News
The FTSE 100 index has experienced fluctuations, with recent data showing a lower close as investors watch for market cues. Shares in Deliveroo have seen a boost following reports of takeover interest from US rival Door Dash. Today’s FTSE Index shows 8379.64.
Latest Wall Street News
US stocks have slipped, with the S&P 500 at 5,591.96 and Nasdaq snapping a three-day losing streak. This reflects broader market volatility and investor sentiment in response to economic data and central bank policies.
Gold as an Investment Compared to the Stock Market
Gold has seen a significant rise in 2024, with prices up 21.45% since the beginning of the year. However, over the very long term, gold has a significantly lower average annual return than stocks. From 1971 to 2024, the stock market delivered average annual returns of 10.7%, while gold delivered an average annual return of 7.9%. Despite this, many investors find gold offers stability in highly volatile periods for the stock market.
Latest News on American Consumer Spending Growth
In the third quarter of 2024, optimism in the US economy grew to its highest level in a year.
The U.S. economy grew last quarter at a healthy 3% annual pace, fuelled by strong consumer spending and business investment, the government said Thursday in an upgrade of its initial assessment.
The Commerce Department had previously estimated that the nation’s gross domestic product — the total output of goods and services — expanded at a 2.8% rate from April through June.
The second-quarter growth marked a sharp acceleration from a sluggish 1.4% growth rate in the first three months of 2024.
Consumer spending, which accounts for about 70% of U.S. economic activity, rose at a 2.9% annual rate last quarter. That was up from 2.3% in the government’s initial estimate. Business investment expanded at a 7.5% rate, led by a 10.8% jump in investment in equipment.
All that said, some of those consumers, especially Gen Z and millennials, continue to be price sensitive, but reports suggest they should see a brighter future ahead.
Stay tuned to world of Auctions for more updates as we continue to monitor these key financial indicators and market trends. World of Auctions – Latest markets news
