The Monetary Policy Committee of the Bank of England meets on Thursday, May 10 to decide the direction of interest rates.
Following a weak UK Q1 2018 GDP growth of only 0.1%, the slowest since Q4 2012 (read here) and inflation falling from 2.7% in February to 2.5% in March (against a Bank of England target of 2%), the market is now pricing in a 17% of a rate rise in May. The market had factored in a 100% chance of a hike just a few weeks ago.
UK 10-year bond yields fell 5bps during the week. The 10-year bond now yields 1.4% (up 0.32% over the past year)
1. Alphabet (the parent company of Google) spent the most as a company on lobbying. Facebook’s spend on lobbying increased 5500% since 2009. They spent most lobbying on changes to … data privacy (Click here to read).
2. This is what has happened to the unemployment rate in the US four to eight months before every recession since the 1940s and why it matters now (Click here to read).
We recently wrote about the UK household savings ratio falling to a record low of 4.9% in 2017 (since comparable records began in 1963) as growth in households’ spending exceeded the growth of households’ income. (Read more here).
The US, the UK, France and Spain all reported GDP numbers over the last week.
US real GDP increased at an annual rate of 2.3% in the first quarter of 2018 as per an advance estimate released by the Bureau of Economic Analysis. Read more about it here.
Personal consumption collapsed, with vehicle sale falling significantly. Business inventories were up significantly too. Total employee compensation (which includes wages and benefits) rose 2.7% over past 12 months, up from 2.4% a year ago and the highest since Q3 2008, while the household savings rate fell to a multi-year low of 3.1%.
UK GDP was estimated to have increased by 0.1% in Q1 2018 as per the Office for National Statistics. We reported here at the end of March that UK households’ saving ratio fell to the lowest ever on record as mortgage and consumer credit outstanding hit the highest ever.