14th November 2017
Latest Financial Market Commentary
The UK Economy Hangs in the Balance
UK house prices are rising at their fastest since January, according to Halifax, but the Royal Institute of Chartered Surveyors suggests they are flat, with sales falling. Who to believe? This is the problem for watchers of the UK economy: different data sets point in different directions, and that is before you even attempt to deal with the politicising of that data.
We were not surprised at all to see 10-year Gilt yields fall after the rate rise last Thursday: long term yields are driven more by growth and inflation expectations than short term rates, and the medium consensus on the UK economy is gloomy given the uncertainty surrounding Brexit and fears of Corbyn government. However, we are just a couple of weeks away from the Autumn budget. Bold policy moves from the Government could conceivably change the narrative economically and politically, and a popularity bounce for the Government could be good for equities. Don’t forget that the FTSE has been flatlining since the Conservatives lost their majority; poll leads for the Tories could conceivably see a rally.
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