Interest Rates and Commodities Spread Betting
|
|
 |
Trading Features / Strategies from Simon Denham of Capital Spreads.
Well it’s BOE and ECB rate day today and much of the betting is focused on the possibility of a cut in both Sterling and the Euro.
Whilst the temperature appears to have gone up a bit in recent days with big rallies in the FTSE 100 and Dax 30 it is really rather early to be calling for an end to the fears over growth and both the MPC and the ECB will be sorely tempted to make some reaction to the increased prospects for a slowdown and damn the inflation bogeyman.
Presumably they will be damned if they do and damned if they don’t by one faction or the other but the weight of probability has fallen decisively (in recent days) into the probability that both will cut by one quarter of a percent. In the current rather fevered situation it must be correct to take a more pragmatic approach than the rather blinkered ‘inflation watch’ stance.
Since the turn of the century events have conspired to keep inflation low even in booming economies no matter what the central banks were doing. The euro zone has had a wildly divergent growth pattern with Ireland and Spain roaring away whilst France and Italy have struggled but the inflation rates in all the various countries has remained very much on an even keel. Whilst Central Bankers have patted themselves on the back for ‘keeping the inflation genie’ in his bottle it is difficult to get away from the feeling that he would have remained firmly stopped up even if rates had been at much lower levels.
Financial Spreads >>
"With FinancialSpreads.com you get all the normal
advantages of Spread Betting plus..." >> read
Financial Spreads review.
|
Now, of course, the boot is very much on the other foot with events beyond the control of those same central bankers forcing inflation ever higher. Pushing up (or keeping high) interest rates is hardly going to make much impact on the price of Crude Oil, Wheat or Rice. These (and others) are globally competed for commodities and are going to the highest bidder. At the moment the ‘highest bidder’ seems desperate to ensure supply in a suddenly much wealthier world economy (at least in the Far East) where increased expectations combined with bigger wallets drive the price ever higher.
Unless supply of virtually everything suddenly increases we can see an environment of ever increasing average annual prices for core staples. This does not mean that we are not likely to have sudden falls in prices (this is still ‘the market’ after all) but the ‘short era’ of widespread cheap consumables may be over.
With the massive transference of wealth from the ‘Atlantic’ economies to individual states amongst the emerging economies it is easy to envisage a time of increased global tension as countries greedily eye the resources of their neighbours. The US may get tired of maintaining its role as global peacekeeper or they may just plain run out of the surplus resources to keep such huge military reserves going. If anyone thought, as many did, that the US had invaded Iraq to secure cheap Oil supply the events of the past few years must have proved something of a reality check. The consequences of disrupted supply can be seen plainly in the recent movements on the Crude Oil markets. A small reduction in Nigerian, Russian and Iraqi supply has had a 25% effect on the price of Crude. A cyclone across Myanmar (in world economic terms a small country) has forced up Rice prices to all time highs.
And let us be quite clear this is in an environment of reasonable stability across the globe. If this changes rulers whose populations are rioting for lack of a staple diet may not make the most sensible of decisions.
Reading back through this comment makes me feel very much like walking down the street with a placard saying “the end is nigh”! Of course the current situation is not as bad as I have intimated but the potential is now there. When it wasn’t before.
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.
'Interest Rates and Commodities Spread Betting' edited by SD, updated 08-May-08
Related Articles:
Daily Spread Betting Blog, updated 22-May-12
In mid-morning trade the FTSE 100 has made a solid start and has continued its push higher. A strong finish in US markets saw the Dow Jones closing on the highs of the...read article: Daily Spread Betting Blog.
Spread Betting Prices, updated 23-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 21-May-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 21-May-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!
|
|
