Analysts said that the news would revive memories of the 2002-03 severe [...]]]> Travel and hotel groups are braced for a turbulent ride today as the markets react to fears over the strain of swine flu that was reported to have killed up to 71 people and closed much of public life in Mexico at the weekend.

Analysts said that the news would revive memories of the 2002-03 severe acute respiratory syndrome (Sars) outbreak.

Although the disease, first noticed in southern China in November 2002, was short-lived, it caused the deaths of 774 people worldwide and had a devastating impact on the Asian economy particularly in Hong Kong and on the shares of many international companies with an economic interest in the Far East.

In Asia, dealers said that any sell off was likely to be in airline and travel related stocks until more was known of the extent of the danger posed by the disease and its probable impact on global trade.

One dealer said that markets were likely to reassess their stance if more countries followed Russia’s decision yesterday to ban meat imports from Mexico, some parts of the United States and several South American countries.

Fund managers played down the risks of a swine flu-related sell-off, saying that Asian markets were used to the threat of potential health scares and were more cautious about moving too soon after reports of new disease strains.

Weekend reports in Tokyo suggested, however, that two of Japan’s biggest travel agencies had cancelled package tours to Mexico before Japan’s “Golden Week” holiday season, which begins on Wednesday.

Viewed by travel agents and airlines as the most lucrative seven days of the Japanese year, Golden Week travel activities by the Japanese are critical to many destinations that rely heavily on tourism income.

The mass cancellation of flights to Mexico will be a heavy blow to airlines, though travel agents said that it would be far more significant if Japanese holidaymakers cancelled flights to America as well.

Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.

The year on year drop in industrial production is the biggest drop since the series began in 1968. The year on year drop in manufacturing [...]]]> UK manufacturing and Industrial production data has been released this morning- both slightly better numbers than expected but that still does not hide the fact that it is grim reading.

The year on year drop in industrial production is the biggest drop since the series began in 1968. The year on year drop in manufacturing output is the biggest since Jan 1981.

Comments from ECB members suggest that the ECB has neared its rate cutting cycle with the sentiment that the ECB and other central banks now need to be vigilant for an upturn in inflation.

With data still coming in progressively weaker in the euro zone and expected to weaken further, inflationary pressure will be very difficult to manage. The Irish government is set to announce its budget- the expectation is for higher taxes and less spending…the economy is contracting sharply and its economy boasts the worst deficit in Europe.

Overnight the Reserve Bank Of Australia cut interest rates to a record low of 3.0%, with unemployment still rising there could be further cuts moving forward, RBA governor Glenn Stevens said the board saw scope for a further modest reduction.

Elsewhere, the Bank Of Japan left rates unchanged at 0.1% and expanded their list of acceptable collateral for money market operations to help liquidate the economy.

Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.

Yesterday we saw unemployment levels rise to 8.6% as the powerhouse of Europe comes under real pressure- this will heighten the cause for more action from the ECB tomorrow.

Today, news from [...]]]> German retail sales for February have fallen 0.2% against the consensus of a rise of 0.2% this morning reinforcing the weak sentiment in Germany.

Yesterday we saw unemployment levels rise to 8.6% as the powerhouse of Europe comes under real pressure- this will heighten the cause for more action from the ECB tomorrow.

Today, news from G20 participants will dominate although there is a raft of data from the US later the most interesting of which will be the ISM survey. The question that needs to be answered is, does a scenario of very easy monetary conditions translate quickly into an improvement in underlying confidence.

I think that given what has gone before, this will not readily happen and that this type of statistic will disappoint for some time to come.

Overnight, the Japanese Tankan was released. The results were mixed but one has say, erred on the weaker side. Business sentiment for both manufacturing and non-manufacturing companies were marginally worse with large and small enterprises both anticipating conditions to deteriorate further during the coming 12-months. the Nikkei remained buoyed however by yesterday’s announcement of additional stimulus measures to be pushed through.

Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.

The fact that CPI has remained steady will slightly ease the pressure on the ECB to cut interest rates in their March meeting.

Over the last week we have continued to see [...]]]> The Euro zone data released this morning (CPI and EU unemployment) has carried the theme of the week and met the consensus expectations.

The fact that CPI has remained steady will slightly ease the pressure on the ECB to cut interest rates in their March meeting.

Over the last week we have continued to see the YEN unwinding particularly against the USD falling 9% from the low to high point in the week- a major shift in sentiment! This is not surprising after a poor start to 2009 for the Japanese economy; figures demonstrated that exports fell 46% in January alone and their economy sank 3.3% in the last 3 months of 2008.

This weak data was exasperated by the resignation of the Japanese finance minister Shoichi Nakagawa following his erratic performance at the recent G7 meeting.

The weakening of the Yen as discussed earlier this week underlines a shift in sentiment away from a currency previously conceived as a “safe haven”. The trend of the “Dollar Index” which tracks the US currency against a basket of currencies demonstrated this movement away from Yen and back into the dollar.

The index has already increased 8% in 2009 as investors are now looking at the US dollar as the favourable option for safety. This is ironic given the awful data arising from the US economy…. yesterday we saw durable goods fall 5.2% in January and jobless claims soared to 667,000- very weak data which only helped to strengthen the dollar as risk aversion and a flight to safety stepped up a notch.

Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.

Investors responded to fears that the world’s largest economy is sinking further into recession and speculation that the US Government may be forced to buy stakes in ailing banks, despite assurances from Washington that lenders would not be nationalised.

Japan’s Nikkei Index [...]]]> Asian stocks fell heavily this morning following last night’s sharp decline in American shares.

Investors responded to fears that the world’s largest economy is sinking further into recession and speculation that the US Government may be forced to buy stakes in ailing banks, despite assurances from Washington that lenders would not be nationalised.

Japan’s Nikkei Index fell by 1.5 per cent to a four-month low, narrowly avoiding a slide to below 7,000 for the first time in 26 years, closing at 7,268.56. In Hong Kong, the Hang Seng lost 461.46 points, or 3.5 per cent, to end the day at 12,713.64. Last night, the Dow Jones industrial average fell to an 11-year low, losing 250.89 points to 7,114.78.

Japanese shares remained in the red for the day despite hints from Kaoru Yosano, the newly appointed Finance Minister, that the Government may be working on more measures to support the domestic share market. “The side-effects of falling stock prices are worse than expected,” said Mr Yosano. “We are witnessing many negative wealth effects with impaired assets held by banks and insurance firms.”

Concern is growing that the Japanese banks, despite their stable capital position relative to peers in the US, will rein-in their spending even more fiercely, triggering bankruptcies throughout the small and medium-sized industrial heartlands of Japan.

Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.

However, they decided that a cut of this magnitude might have serious adverse effects on the value of the [...]]]> The minutes from this month’s Monetary Policy Committee meeting revealed that the MPC recognised the need for a cut in rates of at least 200 bp to ensure that their long-term inflationary goals would be met.

However, they decided that a cut of this magnitude might have serious adverse effects on the value of the currency and hence distort inflation measures in the short term. They also decided to keep at least some of their powder dry so that additional easing could be introduced at later dates in order to try and improve sentiment as/if the economy worsens.

On the back of this it looks odds on that we will see a further cut at the December meeting with the market looking for a 0.50% move lower in rates. Period rates ought to continue to ease on this assumption but so far, there has been little evidence of this happening to any great degree.

Yesterday, we also had the presumed gloomy CBI Manufacturing survey and the market was not disappointed. Despite a small up-tick in the orders index, the overall report was awful with the November index of expected orders falling to a 28-year low. More ammunition for the €˜further rate cuts brigade.

Today will bring the October data for UK Retail Sales. There is absolutely no doubt that the figures will be grim following press reports of dismal High Street conditions and pre-Xmas sales announcements from such stalwarts as Marks & Spencer, John Lewis and Debenhams.

It would not be a surprise if, even in the Xmas run in, we saw a complete standstill in consumer spending y-on-y although the expectations are for a small rise.

The Federal Reserve minutes from the last meeting were also out yesterday afternoon but followed a similar pattern to the UK version. The Board revealed a gloomy economic outlook with potential for further monetary easing. They lowered their estimates for GDP and increased their projected unemployment level, both for the end of 2009.

One thing that was mentioned in the minutes, and something that will crop up more and more in the future given the global economic situation plus the ultra low level of interest rates, is €˜quantitative easing. This entails a government introducing measures that not only flood the market with excess liquidity but also reduce long term interest rates.

Last used in Japan during their long period of deflation (not to any great effect for a long time I add) and likely to become more popular amongst Western Governments during a prolonged grind down in economic activity.

Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.

Barack Obama didn’t show, there was no mention of further co-ordinated monetary easing and no agreement on the wisdom of a large global fiscal stimulus. Only an agreement to lay out a work plan, to be finalised before the next get-together in April next [...]]]> The results from the G20 meeting are at first sight disappointing.

Barack Obama didn’t show, there was no mention of further co-ordinated monetary easing and no agreement on the wisdom of a large global fiscal stimulus. Only an agreement to lay out a work plan, to be finalised before the next get-together in April next year, to strengthen the oversight and regulation of Financial Institutions.

Although this is an important exercise to convince people that Governments will now allow this type of mess to reoccur, the very nature of the proposed plan must be flawed. It is very unlikely that the €˜next crisis will be of the same type as the current one yet regulation will only be introduced that tackles the current crisis.

I still think that further monetary easing had been discussed pre-Washington and that we are likely to see moves in interest rates this month. The next official rate meeting is in Japan on Friday but with their rates already at 0.3%, no change is expected.

Talking of Japan, they are the latest sovereign state to admit slipping into recession following the declaration of the 2nd consecutive negative GDP figure. No surprises here and little reaction on the exchanges.

The Bank of France have followed the trend, predicting that 4th Qtr French GDP will come in at -0.5%. In fact, global data on growth, consumer demand and inflation has recently become very predictable and effects on markets minimal.

The next big reaction will undoubtedly come from positive news from one of the major economies€“ only not just yet. This leads nicely onto pontificating whether Sterling has fallen enough against the Euro especially to enable the UK’s potentially massive trading advantage to have an effect on manufacturing and exports and hence the value of the Pound.

Over the months to come, more and more pundits are going to be trying to pick the base of the exchange rate and eventually someone will be right. These levels do look fantastically cheap and assuming that Gordon Brown and Alistair Darling have got their sums right and also correctly predicted the mood of the country then lower rates could be seriously viewed as a plus point for Sterling.

Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.

Other currencies such as the Australian and New Zealand dollars, the Norwegian krone and the South African rand have rallied [...]]]> The mortgage rates lenders traded in a narrow range until the announcement last night that the Bank of Japan kept its interest rates on hold. Today the yen has lost ground to the dollar and euro.

Other currencies such as the Australian and New Zealand dollars, the Norwegian krone and the South African rand have rallied strongly against the yen since mid-August.

Links to commodity prices such as gold and the anti-inflationary positions of the respective central banks are viewed as important attractions for these currency pairs.

Whilst tighter lending conditions could produce a further credit squeeze, the sentiment from the BOE is that Britain’s economy needs to slow over 2008 to stem inflation. On Tuesday, Darling downgraded the government’s economic forecasts citing the problems stemming from the U.S. economy.

Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and debt consolidation.

Despite yesterday’s slight [...]]]> By 4 pm London time yesterday, the Dow Jones index of leading shares had more or less recouped Wednesday’s 100 plus point decline, while the Nasdaq was up 1 %. Further volatility in asset markets is likely to be the key driver and will likely keep high-yield currencies trading in a choppy fashion.

Despite yesterday’s slight reversal in risk aversion, the markets remain in jittery mood. This is sparking more speculation that more needs to be done by the major central banks, putting a positive gloss at the front end, steepening curves and boosting the demand for mainstream government debt.

The new loss of appetite for risk is hurting stocks, denting credit market sentiment and leading to further unwinding of carry trades.

This unwinding of carry trades, where investors borrow in low-yielding currencies to buy higher-yielding assets has seen the dollar fall from a high of 124 yen in mid-June to a low of below 114 in mid-August, while the euro has dropped from just below 169 yen in mid-July to around 150 in mid-August.

In addition, investors reckon some solid Japanese data coupled with continuing difficulties in the US sub-prime market will help the dollar recover further ground in the days and weeks ahead.

With a raft of high profile Japanese economic readings due before the month end, including retail sales and CPI, plus the prospect of further bad sub-prime news emerging from the US, additional gains for the yen would seem to be of little surprise.

If the Japanese data comes in as expected, then the Bank of Japan is widely expected to raise interest rates from their current super-low level of 0.50 % next month.

The next key event for financial markets is Friday’s speech from US Federal Reserve chairman Ben Bernanke in Jackson Hole, Wyoming. Most observers reckon that he may signal that the Fed is ready to cut its key Fed funds rate from the current 5.25 % at the next meeting on Sept 18.

Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and debt consolidation.

The Central Bank raised its key policy rate to 0.5% from 0.25% last month by an 8-1 vote, judging that the economy would [...]]]> The Bank of Japan kept interest rates on hold overnight leaving the overnight call rate target at 0.5%. The Financial markets response was limited as the unanimous 9-0 vote was widely expected.

The Central Bank raised its key policy rate to 0.5% from 0.25% last month by an 8-1 vote, judging that the economy would stay on track for steady growth with prices seen in an uptrend. In the subsequent press conference Bank of Japan Governor Toshihiko Fukui said “the Central Bank will focus on economic and price movements in guiding monetary policy, but will also keep an eye on currency movements and recent rises in land prices”

Fukui also offered some comments on the recent volatility in financial markets saying this was a “healthy correction”

In the UK today all eyes will be on the release of the CPI number. The headline annual number is expected to drop slightly from the previous reading of 2.7% to 2.6% still well above the Bank of England’s 2.0% target level.

Falls in petrol and food prices are expected to offset rises in airfares following the increase of air passenger duty. Most economists will monitor this very closely for any clues as the Central Banks next move on interest rates.

Also in the UK today Public finances for February will be published. This will also be closely watched ahead of the Budget on Wednesday and are expected to show Chancellor Gordon Brown well on course to meet his targets for the current fiscal year following record surpluses in January.

Public sector net borrowing, the Governments preferred measure of public finances is expected to worsen slightly to £2.5 billion from £2.4 billion.

Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and debt consolidation.

In the Eurozone Friday’s slightly lower than expected German IFO figure came in at 107.5 from [...]]]> The bank of Japan voted 8-1 in favour of raising interest rates by 0.25 basis points to 0.5%. Toshihiko Fukui, BoJ governor, mentioned future rate rises would be very gradual and that they would be keeping monetary policy extremely accommodative.

In the Eurozone Friday’s slightly lower than expected German IFO figure came in at 107.5 from an anticipated 107.5. In spite of that strong Eurozone growth data could provide the ECB with the necessary arguments to defend further interest rate hikes.

Iran, meanwhile, remained defiant on its pursuit of its nuclear programme by admitting it had fired a rocket into the atmosphere. President Mahmoud Ahmadi-Nejad was quoted saying Iran has obtained the technology to produce nuclear fuel and Iran’s move is like a train that has no brakes and no reverse gear.

Mr Ahmadi-Nejad’s comments were quickly picked up by Condoleezza Rice, US secretary of state. “They don’t need a reverse gear,” she responded on Fox News. “They need a stop button.”

This week is light on the data front but Trichet is speaking on Wednesday at 2pm which will be monitored to see if there will any indication on future rate rises.

Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and debt consolidation.

They wanted [...]]]> Yesterday the minutes from the Bank of England’s February Monetary Policy Committee meeting revealed a 7 to 2 vote in favour of keeping UK interest rates on hold at 5.25 per cent. The seven members that voted for a rate hold felt concerned about delivering rate hikes that were too closely spaced together.

They wanted to give the economy time to absorb the latest rate hikes and also wanted to avoid over tightening. The minutes gave no clues on the timing of the next UK interest rate rise. However, the tone of the discussion was significantly more hawkish than that of the December MPC minutes, which preceded January’s surprise rate rise.

In the US consumer prices were slightly better than expected yesterday which helped to contribute to the overall strength of the USD. Having rallied going into the release of the CPI report, the true impact on the dollar was limited.

The minutes from the January FOMC meeting were relatively upbeat about growth and agreed that inflation risks still remain. Even though another rate hike was not justified at the time, they decided against dropping the tightening bias.

The tone of the statement contained the same degree of hawkishness as the comments made by Fed Chairman Bernanke last week, which should keep the prospects of a rate hike later this year in play.

The BoJ voted 8-to-1 in favour of raising increasing interest rates by 25 basis points to 0.5 %. Comments from the BoJ reinforced the market’s belief that despite the increase, interest rates will remain low and any further rate hikes will be delivered gradually.

Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and debt consolidation.