RESEARCH CONTENT
Following decades of arguably loose monetary policy, economic leverage has substantially increased in the UK.
This was first apparent in the private sector, but then in the public sector post-GFC.
Private savings must entirely fund the government’s increasing deficit as well as refinance a portion of the BoE’s holdings, as the latter undertakes QT.
Money and Credit aggregates have declined significantly to multi year lows. Credit is contracting on a real basis.
The market is pricing tight and relatively unchanged monetary policy for the next 15 months.
There is a serious risk of the “crowding out effect” of private assets to finance and refinance government debt.
RPI is likely to stay uncomfortably high and sticky but could decline quickly if poor housing market trends continue – this is not priced into the inflation market.
Price sentiment has recovered substantially in bonds, but it is weakening in Cable – the key support level is identified.
Price sentiment in the FTSE100 is weakening – a key support level is identified.
Kommentare