It's the UK's Turn to Face the "Taper Fear"
Author:
Sober Look
Location:
Date: 2013-08-09
Today we saw another confirmation that the UK's placement on the economic cycle curve (see post) in the "recovery acceleration" section is quite reasonable. The KPMG/REC employment report for the UK showed something we haven't seen in a while - strong hiring demand. Kevin Green of Recruitment & Employment Confederation (source: Markit): - “The jobs market continues to skyrocket with permanent employment and temporary placements at three and two year highs, and vacancy growth accelerating to a six year high. A combination of confidence returning to the UK economy and higher employer demand have contributed to this impressive set of figures. The chart below shows the spike in the KPMG/REC survey that is
now also expected to show up in the Labor Force Survey (from the
Office for National Statistics).
Bloomberg: - The Bank of England will probably need to raise interest rates before the late-2016 horizon currently implied in its new guidance, former U.K. policy maker Charles Goodhart said. As a result of this 7% trigger on unemployment and stronger
economic data out of the UK, the 10y gilt yield has risen much
faster than the 10y treasury in recent days. The BoE governor has
also emphasized that any rise in inflation will override the
long-dated forward rate guidance (the so-called "inflation
knockout"), making gilt investors uneasy.
CNBC: - Thushka Maharaj, rates strategist at Credit Suisse said he was bullish on gilts ahead of the inflation report, but now he recommends closing all "outright long positions" ... Sober Look |