Commodity Prices and Interest Rates
|
|
 |
Trading Features / Strategies from Simon Denham of Capital Spreads.
The dilemma faced by the Bank of England got worse yesterday with inflation figures marking their biggest jump in six years with the government’s annual measurement of inflation coming in at 3%. Anyone hoping for a cut in interest rates next month can think again as this surprise news would have done nothing for the doves who expect inflation to be capped by a slowing British economy. Whether the economy slows by more than predicted or not, prices rises look set to stay. Of course all spikes reach a peak and this jump in inflation will find a ceiling at some point, but at the moment there is little the bank can do to halt the global effect of rising wheat, petrol, butter and milk. Consumers still have to buy their staples and will continue to purchase bread and fill up their cars with petrol and gradually (which is already becoming the case) other luxuries will have to be given up. It takes time for prices movements in the financial markets to filter into the economy (apart from the price of petrol which seems to rise with every dollar that the price of oil goes up). The price of wheat and corn doubled last year, yet the prices increases have only just been passed onto the public in the last few months.
This time lag doesn’t bid well for the future as underlying commodity prices aren’t getting any lower and even if they do fall to anywhere near the sort of prices that we are used to, again it’ll be a while before we see any sort of deflation in the shops.
What does this mean for the economy? Well it’s not ideal I’m afraid as the recent cuts in interest rates by the Bank of England have barely been passed on by lenders, so mortgage rates aren’t getting any cheaper. With more of our income been eaten up but rising prices there’s no wonder people can’t afford to get onto the housing ladder and on top of this house prices are already inflated. At least house prices are coming off the boil, but more due to the lack of buyers than anything else. People are reluctant to jump into a falling market so are taking the “let’s wait and see” approach. Probably a wise move, especially after cabinet members wander around advertising their confidential information showing that after being bullish about the housing market only a week ago, they seem to have changed their tact. An all too familiar scene for the current Government.
Financial Spreads >>
"With FinancialSpreads.com you get all the normal
advantages of Spread Betting plus..." >> read
Financial Spreads review.
|
All this at a time when there’s likely to be a real shift in view at the Bank of England and rates may even go up if inflation continues to ravage our pockets.
Captain Darling’s “mini-budget” isn’t going to help much either with the measly rise in the lowest tax threshold, which he’s had to borrow for. Not a particularly “prudent” move by the successor of the Chancellor who dined out on the word every time he announced a budget and even when he scrapped the 10p rate in the first place.
Enough of the gloom of politics and the economy, have a read of today’s Daily Comment >> at least the markets are in the black this morning and that’s after some dividends have been paid out >> more.
The above comments do not constitute investment advice and neither Capital Spreads nor Clean Financial accept any responsibility for any use that may be made of them.
Capital Spreads >>
"With Capital Spreads you get all the normal
advantages of Spread Betting plus..." >> read
Capital Spreads review.
|
Risk Warning: Spread betting carries a high level of risk to your capital. You may lose more than your initial investment. It may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.
Article provided / approved by Capital Spreads which is a trading name of London Capital Group Ltd which is authorised and regulated by the Financial Services Authority (FSA), FSA Register number 182110.
'Commodity Prices and Interest Rates' edited by SD, updated 17-May-08
Related Articles:
Daily Spread Betting Blog, updated 21-May-12
In mid-morning trading, the FTSE 100 is up around 30 points as markets make an attempt to start the week on a positive note. World leaders at the G8 meeting at least made the right noises about Greece staying in the euro. There has...read article: Daily Spread Betting Blog.
Spread Betting Prices, updated 21-May-12
Spread betting prices - a live spread betting price guide plus which spread betting companies offer live prices, how to use them and...read article: Spread Betting Prices.
Spread Betting Guide, updated 23-Apr-12
Spread Betting Guide: What is spread betting, how to spread bet, spread betting advantages, spread betting examples and...read article: Spread Betting Guide.
Spread Betting Guide to Making a Trade, updated 23-Apr-12
Spread Betting Guide to Making a Trade: A step-by-step guide on how to place a spread bet including a fully worked example and...read article: Spread Betting Guide to Making a Trade.
Stock Market Opening and Closing Times, updated 21-May-12
Stock Market Opening and Closing Times: a look at when the leading European, US and Asian stock markets open and close. Plus, where to get stock market index trading analysis, news and...read article: Stock Market Opening and Closing Times.
Spread Betting v Share Trading, updated 21-May-12
Some people see spread betting and standard trading as two different sides of the same coin. Whilst the pair do share similarities, it is fair to say that...read article: Spread Betting v Share Trading.
Sectors Spread Betting, updated 21-May-12
Sectors spread betting is a convenient way of taking a position on an entire industry by giving investors exposure to a basket of underlying stocks in a particular sector. Sectors are groups of firms that all...read article: Sectors Spread Betting.
First Page << 1 2 3 4 5 6 7 8 9 10 11 12 >> Last Page
Also see:
Trading Features / Strategies Index – an index of all the Trading Features.
|
|
Q) Average Trading Results?
A) Get free spread betting tips, offers, price updates, important news and more!
|
|
