Pound and Gilt Yield higher ahead of BoE decision this week

Pound and Gilt Yield higher ahead of BoE decision this week

Global stock-markets were higher last week after the US Federal Reserve left interest rates unchanged but the Fed made it clear it plans to hike rates further in months to come. By how much and when will depend on inflation data which will determine “the extent of additional policy firming that may be appropriate.” Chairman Powell said it would probably be “about a couple years out” before rates might be cut.

Data released early last week showed the rate of US inflation had fallen to 4.0% in May, a two year low. In summary – inflation is seen to be falling but is still uncomfortably high. Fed officials themselves expect there to be two more 0.25% hikes this year and currently the market expects a further 0.25% hike in July and then a halt.

The British pound has been rallying recently against most major currencies and today (Monday) the yield on the 10year Gilt reached 4.465%, close to the October peak which was the highest level since 2008. UK inflation data will be released on Wednesday and the Bank of England will announce its latest interest rate decision on Thursday.

UK Market Chart 16th June 2023

US Market Chart 16th June 2023

US Risk Barometer 16th June 2023

Europe Risk Barometer 16th June 2023

Disclaimer: ‘Where the business has expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice. The information contained within this communication is believed to be reliable but Realm Investment Management Limited does not warrant its completeness or accuracy.

This communication is not intended as a recommendation to invest in any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication. The information provided is for illustrative purposes only, it should not be relied upon as recommendations to buy or sell investments.’

Download Our Free Brochure