Aurelia Butler

LONDON (Reuters) – Britain’s housing market recovered momentum in September, as the Bank of England’s first interest rate cut in more than three years and greater political certainty after July 4’s election boosted activity, property website Rightmove (OTC:RTMVY) said on Monday. Rightmove said average asking prices for homes increased by 0.8% after a sharp 1.5% drop in August. September’s rise was double the average for the time of year in the series and the biggest for the month since 2016.Compared with a year earlier, asking prices were 1.2% higher at 370,759 pounds ($487,140).Tim Bannister, Rightmove’s director of property science, said the housing market was invigorated by a new government and the first rate cut from the BoE since 2020. But Rightmove said there were “still uncertainties ahead, including the timing of a second Bank Rate cut, and which segments of the market could be affected by announcements in October’s Autumn Statement.” The BoE is expected to hold interest rate at 5% on Sept. 19 – although markets last week saw a 30% chance of an early cut – and cooling wage growth is likely to keep the central bank on track to cut at least once more by the end of the year. Prime Minister Keir Starmer’s Labour government has promised to reform Britain’s planning system and has set mandatory targets to speed up housebuilding, but the shortage of home supply is likely to remain a factor driving prices for the medium term.Britain’s finance minister Rachel Reeves is set to deliver her first annual budget on Oct. 30.Rightmove’s monthly survey also showed the number of sales agreed between buyers and sellers rose 27% from a year ago as buyer demand improved on the back of lower borrowing costs.The average five-year fixed mortgage rate last week was 4.67%, Rightmove said, down from 6.11% in July 2023.Other measures of Britain’s housing sector have also shown improvement in sentiment after a recent fall in interest rates.A closely-watched Royal Institution of Chartered Surveyors report last week showed a sharp jump in sales expectations in the coming months.($1 = 0.7611 pounds) More

NEW YORK (Reuters) – U.S. stock futures and the dollar were little changed on Sunday after Republican presidential candidate Donald Trump was safe following what the FBI said appeared to be an assassination attempt outside Trump’s golf course in West Palm Beach, Florida.Secret Service agents engaged a gunman in some bushes near the property line of the golf course and fired at least four rounds of ammunition, law enforcement officials said during an afternoon press conference.S&P 500 e-minis were down 0.04%. The Dollar Index, which measures the U.S. currency’s strength against six major peers, was down 0.03% to 101.07.Bitcoin was 0.7% lower on the day at $59,445. Trump has positioned himself as a pro-cryptocurrency candidate.While there was little market reaction to the news, analysts said the incident had the potential to spur volatility.”Foreign exchange rates could experience turbulence in the coming hours as news of a second assassination attempt lands amid thin trading volumes,” said Karl Schamotta, chief market strategist at payments company Corpay in Toronto.Asset classes and sectors seen benefiting from a second Trump term received a boost earlier this year after Trump survived in an assassination attempt in Pennsylvania on July 13. The so-called “Trump trade,” however, came under pressure last week after a closely watched debate between Trump and Vice President Kamala Harris left betting markets pegging a stronger likelihood of a Harris win in November.”Perhaps we may see some look to get back into the ‘Trump Trade’ if this sees Trump receive a boost in the polls like we saw after the earlier assassination attempt – boosting both equities, and the dollar,” said Michael Brown, senior research strategist at online broker Pepperstone, in London. “That said, with the FOMC looming large on Wednesday, conviction among market participants will likely be lacking until we hear from Powell & Co,” he said.Betting markets logged little reaction to the incident on Sunday, with Harris’ odds in PredictIt’s 2024 presidential general election market at 56 cents, while Trump’s odds were at 47 cents.The Federal Reserve is in focus as uncertainty swirls over how much the U.S. central bank will cut interest rates at its -Sept. 17-18 monetary policy meeting and the pace at which it will reduce borrowing costs in coming months.”The dollar could yet climb on a modest recovery in the ‘Trump trade,’ but any effect should be relatively modest in scale,” Corpay’s Schamotta said. More

(Reuters) – A look at the day ahead in Asian markets.Asia kicks off the trading week on Monday with investors likely to give a big thumbs down to yet another batch of uniformly disappointing economic indicators from China, while at the same time cheering one of Wall Street’s best weeks of the year.Fueled by growing hopes that the Federal Reserve will kick off its interest rate-cutting cycle with a 50-basis-point cut rather than a quarter-point move later this week, U.S. stocks rose solidly on Friday, which could provide a good springboard for Asia on Monday.The S&P 500 got to within 1% of its July 15 all-time high and the Nasdaq ended the week up 6%, its best week since October. Volatility across asset classes fell – the ‘MOVE’ index of implied Treasury market volatility is at its lowest since late July.That’s the backdrop to the start of a hugely important week for markets around the world with the highlight being the Fed’s rate decision and revised economic forecasts on Wednesday, but maybe even more so for Asian markets.Japan and Hong Kong release inflation data, and there are monetary policy decisions from Indonesia, Taiwan, China and the Bank of Japan later in the week. The local focus on Monday will be China and yet another wave of worrying economic data.There are those in the more speculative corners of the investment community with a higher tolerance for risk, like hedge funds, who are bound to be looking at China right now as an attractive bet.Stocks have fallen 15% in a couple of months and are flirting with the lowest levels in nearly six years, deflation hangs heavily over the economy, the growth outlook is darkening, and authorities appear unable or unwilling to unleash the stimulus required to turn all that around.Capital inflows are drying up and outflows are picking up, forcing the central bank to act more vigorously to protect the exchange rate. Indeed, the yuan has strengthened notably in recent weeks.But the data released on Saturday gave no indication that a broader and more lasting turnaround is in sight. If anything, they suggest such a scenario is as far away as ever. Official figures on Saturday showed that new home prices fell at their fastest pace in nine years, industrial output growth slowed to a five-month low, foreign direct investment is down 31.5% and retail sales weakened further. And on Friday, meanwhile, the Biden administration locked in steep tariff hikes on Chinese imports, including a 100% duty on electric vehicles. Beijing said it would take “necessary measures to resolutely defend the interests of Chinese companies.” Here are key developments that could provide more direction to Asian markets on Monday:- Germany wholesale price inflation (August)- New York Fed manufacturing index (September)- U.S. 3-month, 6-month T-bill auctions More

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The annual inflation rate rose to 3.6% last month from 3.2% in July, its highest level since last October. It was well above expectations of 3.2% in a Reuters poll and far exceeds the government’s 1-3% annual target range.Government officials have largely blamed war-related supply issues for the spike in inflation.The consumer price index rose by a higher than expected 0.9% in August from July, bolstered by higher costs of fresh produce, food, housing, transport, education and entertainment. These were only partly offset by declines in clothing and footwear, telecoms and furniture.After cutting its benchmark interest rate in January, the Bank of Israel has left the rate unchanged at subsequent meetings in February, April, May, July and August, citing geopolitical tensions, rising price pressures and looser fiscal policy due to Israel’s war with the Palestinian militant group Hamas.It next decides on rates on Oct. 9. Israeli central bankers have said they do not expect rate cuts until 2025. More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.In times of uncertainty, central bankers have often invoked the “Brainard conservatism principle”. Coined by economist William Brainard in 1967, it recommends that when monetary policymakers are unsure of the effects of their interest rate policies, they ought to react by less than they would with greater certainty. As the US Federal Reserve discusses whether to initiate the rate-cutting cycle with a reduction of 25 or 50 basis points at its meeting this week, the principle would appear to give a clear answer. But caution is less relevant when the balance of risks to the Fed’s dual mandate — to achieve 2 per cent inflation, and support employment — are uneven. That may now be the case. The August consumer price index data showed annual price growth falling to just 2.5 per cent, in line with the Fed’s preferred PCE measure. The jobs market, however, is cooling rapidly. Non-farm payroll numbers have been revised down over the summer, the jobs opening rate is back near pre-pandemic levels and small business hiring plans are subdued. Put simply, the risk of over-constraining the American jobs market seems to be greater than the risk of US inflationary pressures reviving again. High rates are sapping demand, and while significant lay-offs have not occurred yet, they often spiral when they do arise as rising unemployment tends to feed off itself. It makes sense to guard against this outcome, by making a substantive rate cut, particularly given the space the Fed has on the inflation side of its mandate. Indeed, even as rates fall, some households and businesses that had locked in low rates during the pandemic may experience a tightening as they refinance.Advocates for a 25bp cut argue that the inflation battle is not yet won. It is true that services inflation remains high. But a significant proportion of that comes from shelter costs, which include components that lag above actual market prices. Excluding shelter, CPI inflation is below 2 per cent. Wage growth, a key price pressure, is also tame. Elevated pay growth in the UK, by contrast, is one reason why the Bank of England — which has already made its first cut — may hold fire when it meets on Thursday.Recent shifts in futures pricing have also improved the case for a heftier cut. For a few weeks, investors were mostly expecting a 25bp cut in September, but market bets for a 50bp cut rose on Friday, following comments by former Fed officials reported in the Financial Times. This has lowered the risk of surprising the market on Wednesday and stirring a frantic sell-off. (Indeed, over the summer, traders demonstrated their jitteriness over even slight misses in their expectations.) If expectations for a larger cut do not recede notably by midweek, a 50bp cut would be easier to communicate. A clear and calming tone from the Fed, in any case, would be needed.But, if Powell does play it cautiously, with 25bp, there is a greater onus on him to flesh out the central bank’s subsequent rate-cutting plans. A dovish tone that emphasises the need for cuts in the final quarter, outlines the path beyond, and mentions the Fed’s willingness to make chunkier cuts if needed, could help send the right signal to markets. The US election, which is a day before the Fed’s next meeting in November, obscures the economic outlook somewhat. Powell can only act on what he knows now, and is right to ignore politics — including threats from Donald Trump over the Fed’s independence.Central banking is an inexact science. Yes, uncertainty warrants caution, but it also means taking out the right insurance when possible. A 50bp cut this week safeguards against overly restricting the economy and adverse market reactions to any weak data releases before its next meeting. Providing investors remain open to a bigger cut, invoking Brainard’s principle this time around feels less justifiable. More

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