#BankOfEngland #Interestrates #StockMarkets The Bank of England voted 7-2 in favour of holding interest rates at 0.75% and gold and silver prices rose even though sterling strengthened a little.
Equity markets have soared on the back of the US announcing that the China Phase 1 trade deal will be signed in January.
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Today is Thursday 19th December 2019 and yesterday we produced a video entitled:
Gold & Silver May Now be Cheap in Sterling Terms
and on Tuesday
Gold & Silver Range bound But May Break Shortly
Well the time of writing this podcast is 16.40 and The Bank of England has agreed to keep interest rates on hold at 0.75% with the 9 strong Monetary Policy Committee voting 7 -2 in favour of holding rates. Now whilst no-one seriously expected rates to be reduced today, they were looking for some sort of language to suggest that they might be early in the new year though this was not forthcoming.
Sterling recovered a little after the news but is still lower against the US dollar than it was yesterday, currently trading at $1.30 to the pound.
When we produced yesterday’s video gold was standing at £1,128 and silver at £12.99. Right now, gold is £6 higher at £1,134 and silver 8 pence higher at £13.06.
Its still our contention that whilst sterling may recover ever so slightly, we have probably seen its highs against the dollar well into the new year.
Also in the last few minutes, US Treasury Secretary Steven Mnuchin has announced to reporters at the White House that the United States and China would sign their Phase one trade pact at the beginning of January, adding that it was completely finished and just undergoing a technical “scrub.” – but all of the points had been agreed but they are just working on language translations.
One key aspect of the deal is that U.S. farm product exports to China is likely to double over the next two years and combined with other trading aspects would add about 0.5% to US economic growth over that period.
Well the dollar index is currently up just a little at 97.40, and gold is trading at $1477 and silver at $17.03 – though it had been lower earlier in the day. US stocks have reacted positively with the Dow Jones up almost 0.5% and the S&P 500 index has just surpassed 3,200
As we have stated time and time again over the past couple of months, to expect a rise in equities before the year is out, but in fairness, whilst range bound , gold and silver in US dollar terms are also holding up pretty well.
Yesterday Congress voted in favour of impeaching president Trump but this seems to have had little effect on markets as almost everyone knows, the Senate will not convict, so for us outsiders, its an interesting sideshow but is not expected to have a major impact on markets.
What is of interest and we are watching this closely is that the yield curve, which not so long ago was inverted has steepened quite rapidly and also the Repo market seem to have been covered in time for the year end. Prima facie this looks like great news but there are some sharks lurking at the bottom of this monetary water tank and we shall comment more on this in a future video.
Finally, we had hoped to bring you our end of year forecasts today but realistically we have run out of time but shall do our utmost best to endeavour to complete this by the weekend with a view to publishing on Sunday.
Meanwhile do let us know your thoughts and also start to look at steel and copper as they will provide a good indication as to whether the world is entering into economic recession in 2020 or not – a rise in demand and consumption would suggest a buoyant 2020 whereas a fall suggests a differing picture – its not guaranteed but it is one of those much ignored factors which are far too easily missed.
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