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| UK borrowing costs hit highest level since Brexit vote– as it happened | |
| (35 minutes later) | |
| 5.58pm BST | 5.58pm BST |
| 17:58 | 17:58 |
| Sterling has edged up against the dollar but is still below $1.22 after the speech from US Federal Reserve vice chairman Stanley Fischer. | Sterling has edged up against the dollar but is still below $1.22 after the speech from US Federal Reserve vice chairman Stanley Fischer. |
| He said “a variety of factors have been holding down interest rates and may continue to do so for some time,” which seems contrary to the idea of an imminent US rate rise. | He said “a variety of factors have been holding down interest rates and may continue to do so for some time,” which seems contrary to the idea of an imminent US rate rise. |
| So the pound is currently up 0.07% at $1.2192, while against the euro it is off its worst levels, down 0.19% at €1.1084. | So the pound is currently up 0.07% at $1.2192, while against the euro it is off its worst levels, down 0.19% at €1.1084. |
| As for bonds, they have also recovered some ground but the 10 year yield at 1.117%, up 0.02 percentage points, is still at its highest since the aftermath of the Brexit vote. | As for bonds, they have also recovered some ground but the 10 year yield at 1.117%, up 0.02 percentage points, is still at its highest since the aftermath of the Brexit vote. |
| On that note, it’s time to close for the evening. Thanks for all your comments, and we’ll be back tomorrow. | On that note, it’s time to close for the evening. Thanks for all your comments, and we’ll be back tomorrow. |
| 5.35pm BST | 5.35pm BST |
| 17:35 | 17:35 |
| Factors holding down interest rates could continue - Fed's Fischer | |
| A leading member of the US Federal Reserve has warned of the dangers of continuing low interest rates. Vice chairman Stanley Fischer said in a speech in New York there were three reasons to be concerned about low rates: | A leading member of the US Federal Reserve has warned of the dangers of continuing low interest rates. Vice chairman Stanley Fischer said in a speech in New York there were three reasons to be concerned about low rates: |
| First, and most worrying, is the possibility that low long-term interest rates are a signal that the economy’s long-run growth prospects are dim...A second concern is that low interest rates make the economy more vulnerable to adverse shocks that can put it in a recession...And the third concern is that low interest rates may also threaten financial stability as some investors reach for yield and compressed net interest margins make it harder for some financial institutions to build up capital buffers... | First, and most worrying, is the possibility that low long-term interest rates are a signal that the economy’s long-run growth prospects are dim...A second concern is that low interest rates make the economy more vulnerable to adverse shocks that can put it in a recession...And the third concern is that low interest rates may also threaten financial stability as some investors reach for yield and compressed net interest margins make it harder for some financial institutions to build up capital buffers... |
| Those are three powerful reasons to prefer interest rates that are higher than current rates. But, of course, Fed interest rates are kept very low at the moment because of the need to maintain aggregate demand at levels that will support the attainment of our dual policy goals of maximum sustainable employment and price stability, defined as the rate of inflation in the price level of personal consumption expenditures.. being at our target level of 2 percent. | Those are three powerful reasons to prefer interest rates that are higher than current rates. But, of course, Fed interest rates are kept very low at the moment because of the need to maintain aggregate demand at levels that will support the attainment of our dual policy goals of maximum sustainable employment and price stability, defined as the rate of inflation in the price level of personal consumption expenditures.. being at our target level of 2 percent. |
| He said there were a variety of factors holding down interest rates - including slow economic growth, low investment, a slowdown in the global economy - and they may continue to go so for some time. | He said there were a variety of factors holding down interest rates - including slow economic growth, low investment, a slowdown in the global economy - and they may continue to go so for some time. |
| But he added economic policy could help offset these factors, and boost the economy’s growth potential: | But he added economic policy could help offset these factors, and boost the economy’s growth potential: |
| While there is disagreement about what the most effective policies would be, some combination of more encouragement for private investment, improved public infrastructure, better education, and more effective regulation is likely to promote faster growth of productivity and living standards--and also to reduce the probability that the economy and, particularly, the central bank will in the future have to contend with the effective lower bound. | While there is disagreement about what the most effective policies would be, some combination of more encouragement for private investment, improved public infrastructure, better education, and more effective regulation is likely to promote faster growth of productivity and living standards--and also to reduce the probability that the economy and, particularly, the central bank will in the future have to contend with the effective lower bound. |
| Updated | |
| at 6.09pm BST | |
| 5.21pm BST | 5.21pm BST |
| 17:21 | 17:21 |
| Greek protestors as inspectors arrive | Greek protestors as inspectors arrive |
| Helena Smith | Helena Smith |
| Over in Greece thousands of leftwing protestors are demonstrating outside the Athens parliament as pressure mounts on the government to revoke unpopular reforms demanded by the country”s creditors. Helena Smith reports from Athens: | Over in Greece thousands of leftwing protestors are demonstrating outside the Athens parliament as pressure mounts on the government to revoke unpopular reforms demanded by the country”s creditors. Helena Smith reports from Athens: |
| Timed to coincide with the arrival this week of international inspectors, the rally is one of scores taking place this evening around Greece by protestors aligned with the communist-run labour group Pame. | Timed to coincide with the arrival this week of international inspectors, the rally is one of scores taking place this evening around Greece by protestors aligned with the communist-run labour group Pame. |
| In a sign of the disquiet measures have caused, some 436 labour groups have joined the protests seen as the first step in a campaign to send a “fierce response” to a government implementing “barbaric measures” under the guise of progressive policy. | In a sign of the disquiet measures have caused, some 436 labour groups have joined the protests seen as the first step in a campaign to send a “fierce response” to a government implementing “barbaric measures” under the guise of progressive policy. |
| Demonstrators denounced cuts that will reduce Greeks “to further wretchedness” demanding the reinstatement of collective work agreements that the ruling two party coalition has vowed to abolish along with other labour reforms. | Demonstrators denounced cuts that will reduce Greeks “to further wretchedness” demanding the reinstatement of collective work agreements that the ruling two party coalition has vowed to abolish along with other labour reforms. |
| Meanwhile technical groups representing the EU and IMF have been poring over files in preparation of the arrival of mission chiefs. The review, projected by credit rating agency Fitch to take months, comes as government officials announced that prime minister Alexis Tsipras will meet the French and German leaders later this week to discuss the review. | Meanwhile technical groups representing the EU and IMF have been poring over files in preparation of the arrival of mission chiefs. The review, projected by credit rating agency Fitch to take months, comes as government officials announced that prime minister Alexis Tsipras will meet the French and German leaders later this week to discuss the review. |
| 5.06pm BST | 5.06pm BST |
| 17:06 | 17:06 |
| European markets end lower | European markets end lower |
| A combination of factors, but all revolving around the uncertainty over Brexit, have seen the UK market start the week on a negative note, falling further than its European peers. Jasper Lawler, market analyst at CMC Markets, said: | A combination of factors, but all revolving around the uncertainty over Brexit, have seen the UK market start the week on a negative note, falling further than its European peers. Jasper Lawler, market analyst at CMC Markets, said: |
| Markets have started the week on a softer note with stocks and oil lower, yields streaking higher and havens including gold and the Japanese yen in demand. | Markets have started the week on a softer note with stocks and oil lower, yields streaking higher and havens including gold and the Japanese yen in demand. |
| Reports of divisions between Chancellor Philip Hammond and the rest of Theresa May’s cabinet over Brexit have caused investors to sell UK assets across the board. UK stocks, bonds and the pound were all lower on Monday. | Reports of divisions between Chancellor Philip Hammond and the rest of Theresa May’s cabinet over Brexit have caused investors to sell UK assets across the board. UK stocks, bonds and the pound were all lower on Monday. |
| Over the weekend Mr Hammond was rumoured as preparing to quit over the divisions, though the Treasury has since denied this is the case. In a cabinet with some hot-headed opinions on Brexit, Mr Hammond is viewed by markets as a cooler cucumber. His departure and the resulting political uncertainty would likely see another nose-dive in the pound and exacerbate the rise in gilt yields. | Over the weekend Mr Hammond was rumoured as preparing to quit over the divisions, though the Treasury has since denied this is the case. In a cabinet with some hot-headed opinions on Brexit, Mr Hammond is viewed by markets as a cooler cucumber. His departure and the resulting political uncertainty would likely see another nose-dive in the pound and exacerbate the rise in gilt yields. |
| The EY Item Club calling the economic stability in the UK since the Brexit vote “deceptive” and Open Europe suggesting banks could shift operations to Europe in 2017 without passporting rights are doing little to remedy shaken sentiment. | The EY Item Club calling the economic stability in the UK since the Brexit vote “deceptive” and Open Europe suggesting banks could shift operations to Europe in 2017 without passporting rights are doing little to remedy shaken sentiment. |
| The government bond sell-off has sent UK 10 year Gilt yields to the highest since the EU referendum, putting them on course for one of the biggest monthly rises in 20 years. | The government bond sell-off has sent UK 10 year Gilt yields to the highest since the EU referendum, putting them on course for one of the biggest monthly rises in 20 years. |
| US markets have also edged lower although positive results from Bank of America have helped limit the damage. The final scores in Europe showed: | US markets have also edged lower although positive results from Bank of America have helped limit the damage. The final scores in Europe showed: |
| On Wall Street, the Dow Jones Industrial Average is currently down 24 points or 0.13%. | On Wall Street, the Dow Jones Industrial Average is currently down 24 points or 0.13%. |
| 4.23pm BST | 4.23pm BST |
| 16:23 | 16:23 |
| Here’s our latest report on the perceived tensions in the government over Brexit which have helped weaken the pound, from Peter Walker: | Here’s our latest report on the perceived tensions in the government over Brexit which have helped weaken the pound, from Peter Walker: |
| Theresa May is keen to hear the “differing views” of ministers in the run-up to Brexit negotiations, her spokeswoman has said following cabinet media briefings against the chancellor, Philip Hammond, by pro-leave cabinet colleagues. | Theresa May is keen to hear the “differing views” of ministers in the run-up to Brexit negotiations, her spokeswoman has said following cabinet media briefings against the chancellor, Philip Hammond, by pro-leave cabinet colleagues. |
| In a sign of apparent cabinet tensions over the balance between limiting immigration and keeping open access to the EU, unnamed cabinet sources told two newspapers about anger towards Hammond over his concerns about plans to swiftly restrict immigration from the EU. | In a sign of apparent cabinet tensions over the balance between limiting immigration and keeping open access to the EU, unnamed cabinet sources told two newspapers about anger towards Hammond over his concerns about plans to swiftly restrict immigration from the EU. |
| But the prime minister’s official spokeswoman told reporters: “The prime minister has full confidence in the chancellor and the work that he is doing.” | But the prime minister’s official spokeswoman told reporters: “The prime minister has full confidence in the chancellor and the work that he is doing.” |
| The chancellor is said to have used a meeting last week of May’s cabinet Brexit committee to urge caution about a plan to force EU workers to show they have a guaranteed skilled job before they are allowed into Britain. | The chancellor is said to have used a meeting last week of May’s cabinet Brexit committee to urge caution about a plan to force EU workers to show they have a guaranteed skilled job before they are allowed into Britain. |
| The full story is here: | The full story is here: |
| 4.14pm BST | 4.14pm BST |
| 16:14 | 16:14 |
| It’s not just against the dollar that the pound is weakening. It has slipped 0.24% against the euro to €1.1073, but this is still better than the six year low of €1.094 it reached last Tuesday. | It’s not just against the dollar that the pound is weakening. It has slipped 0.24% against the euro to €1.1073, but this is still better than the six year low of €1.094 it reached last Tuesday. |
| 3.40pm BST | 3.40pm BST |
| 15:40 | 15:40 |
| Oil prices are on the slide on renewed concerns that producer will be able to finalised a proposed deal to limit output when they meet next month in Vienna. | Oil prices are on the slide on renewed concerns that producer will be able to finalised a proposed deal to limit output when they meet next month in Vienna. |
| Iranian oil minister Bijan Zanganeh said on Monday he was optimistic about a deal but when asked if his country’s output was now high enough after its return on sanctions for it to join an agreement, he said: “We should decide in November how much each country should produce.” The amount each country can produce could well prove a new stumbling block. | Iranian oil minister Bijan Zanganeh said on Monday he was optimistic about a deal but when asked if his country’s output was now high enough after its return on sanctions for it to join an agreement, he said: “We should decide in November how much each country should produce.” The amount each country can produce could well prove a new stumbling block. |
| At any rate, Brent crude is down 1% at $51.42 a barrel while West Texas Intermediate, the US benchmark, has fallen 1.1% to $49.79. | At any rate, Brent crude is down 1% at $51.42 a barrel while West Texas Intermediate, the US benchmark, has fallen 1.1% to $49.79. |
| 2.48pm BST | 2.48pm BST |
| 14:48 | 14:48 |
| Wall Street opens lower | Wall Street opens lower |
| US markets have followed the general downward trend, ahead of a spate of important economic data later in the week, notably inflation figures. | US markets have followed the general downward trend, ahead of a spate of important economic data later in the week, notably inflation figures. |
| The Dow Jones Industrial Average is currently down 30 points or 0.17%, with markets unmoved by reasonable results from the likes of Bank of America and Hasbro. | The Dow Jones Industrial Average is currently down 30 points or 0.17%, with markets unmoved by reasonable results from the likes of Bank of America and Hasbro. |
| Updated | Updated |
| at 3.28pm BST | at 3.28pm BST |
| 2.26pm BST | 2.26pm BST |
| 14:26 | 14:26 |
| Paul Sirani, chief market analyst at Xtrade, said: | Paul Sirani, chief market analyst at Xtrade, said: |
| Today’s news that industrial production has returned to growth is the latest encouraging piece of data to come out of the US in recent weeks. It is also a very positive result considering the strength of the dollar and China’s weakening trade demands. | Today’s news that industrial production has returned to growth is the latest encouraging piece of data to come out of the US in recent weeks. It is also a very positive result considering the strength of the dollar and China’s weakening trade demands. |
| 2.19pm BST | 2.19pm BST |
| 14:19 | 14:19 |
| More US data, and a recovery in industrial production. | More US data, and a recovery in industrial production. |
| Industrial output rose by 0.1% in September, better than the 0.5% fall seen in August but lower than the 0.3% expected. Manufacturing output rose by 0.2% in September, compared to expectations of no change and a 0.5% drop in August, revised down from the original 0.4% decline. | Industrial output rose by 0.1% in September, better than the 0.5% fall seen in August but lower than the 0.3% expected. Manufacturing output rose by 0.2% in September, compared to expectations of no change and a 0.5% drop in August, revised down from the original 0.4% decline. |
| Manufacturing capacity utilisation edged up from 74.8% to 74.9%. | Manufacturing capacity utilisation edged up from 74.8% to 74.9%. |
| Updated | Updated |
| at 3.28pm BST | at 3.28pm BST |
| 1.52pm BST | 1.52pm BST |
| 13:52 | 13:52 |
| More on Tuesday’s UK inflation figures, and Kathleen Brooks, research director at City Index, reckons the number could be higher than the market believes: | More on Tuesday’s UK inflation figures, and Kathleen Brooks, research director at City Index, reckons the number could be higher than the market believes: |
| The market is expecting prices to rise by an annual 0.9% rate last month, up from 0.6% in August. Core prices, which exclude energy and food prices, are also expected to pick up to 1.4% from 1.3%. | The market is expecting prices to rise by an annual 0.9% rate last month, up from 0.6% in August. Core prices, which exclude energy and food prices, are also expected to pick up to 1.4% from 1.3%. |
| We believe that the risks are to the upside for September’s price data, as the impact of a weak pound continues to weigh on price pressure.... | We believe that the risks are to the upside for September’s price data, as the impact of a weak pound continues to weigh on price pressure.... |
| We think.. annual CPI could breach the 1% mark for September, while the market expects a reading of 0.9%. A strong inflation reading could be another reason to sell the pound tomorrow, which, ironically, could lead to even higher inflation in the coming months. If prices rise as we expect, then the Monetary Policy Committee’s 2% inflation target to be breached at some point in the first quarter of 2017. | We think.. annual CPI could breach the 1% mark for September, while the market expects a reading of 0.9%. A strong inflation reading could be another reason to sell the pound tomorrow, which, ironically, could lead to even higher inflation in the coming months. If prices rise as we expect, then the Monetary Policy Committee’s 2% inflation target to be breached at some point in the first quarter of 2017. |
| If, against the odds, CPI does not rise by as much as expected, then we would expect the pound to rally as it could brighten the UK economic outlook and put less pressure on future consumption. However, we view this outcome as unlikely at this stage. | If, against the odds, CPI does not rise by as much as expected, then we would expect the pound to rally as it could brighten the UK economic outlook and put less pressure on future consumption. However, we view this outcome as unlikely at this stage. |
| 1.41pm BST | 1.41pm BST |
| 13:41 | 13:41 |
| The Empire report says: | The Empire report says: |
| Business activity continued to decline in New York State, according to firms responding to the October 2016 Empire State Manufacturing Survey. The headline general business conditions index slipped five points to -6.8. The new orders index edged up but remained negative at -5.6, indicating an ongoing drop in orders, and the shipments index increased to -0.6, suggesting that shipments were essentially flat. | Business activity continued to decline in New York State, according to firms responding to the October 2016 Empire State Manufacturing Survey. The headline general business conditions index slipped five points to -6.8. The new orders index edged up but remained negative at -5.6, indicating an ongoing drop in orders, and the shipments index increased to -0.6, suggesting that shipments were essentially flat. |
| Labor market conditions remained weak, with both employment levels and the average workweek reported as lower. Price indexes increased somewhat, and continued to signal moderate input price increases and a slight increase in selling prices. | Labor market conditions remained weak, with both employment levels and the average workweek reported as lower. Price indexes increased somewhat, and continued to signal moderate input price increases and a slight increase in selling prices. |
| But the outlook is more optimistic: | But the outlook is more optimistic: |
| Indexes for the six-month outlook suggested that manufacturing firms expect conditions to improve in the months ahead. | Indexes for the six-month outlook suggested that manufacturing firms expect conditions to improve in the months ahead. |
| 1.35pm BST | 1.35pm BST |
| 13:35 | 13:35 |
| Weak manufacturing data from US | Weak manufacturing data from US |
| The latest snapshot of US manufacturing - in this case in New York state - has shown a shock plunge rather than the expected revival. | The latest snapshot of US manufacturing - in this case in New York state - has shown a shock plunge rather than the expected revival. |
| The New York Empire manufacturing index came in at -6.8 in October compared to -2.0 in September and forecasts of a rebound to 1.1. This is the lowest level since May. | The New York Empire manufacturing index came in at -6.8 in October compared to -2.0 in September and forecasts of a rebound to 1.1. This is the lowest level since May. |
| Empire State Manufacturing Index prints -6.8 vs +1.1 expected and -2.0 in September ^FR #FX | Empire State Manufacturing Index prints -6.8 vs +1.1 expected and -2.0 in September ^FR #FX |
| Updated | Updated |
| at 1.37pm BST | at 1.37pm BST |