Best Financial Markets Analysis Article Perhaps unsurprisingly, US government bond and swap markets rallied sharply immediately after yesterday’s weak producer price and housing data. Both sets of numbers are highly relevant to the economic recovery process in the US. A housing market slowdown triggered the current economic and financial crisis and many are looking for the same sector to lead the US into durable economic recovery.

Meanwhile, softer-than-expected producer prices in September (the “core” measure declined by 0.1% m/m) were a reminder that while firms may be tempted to raise prices during a period of financial market optimism, the underlying demand environment may be somewhat weaker. In short, questions remain on whether economic fundamentals are playing any meaningful role in the current stock market rally.

Today’s economic data releases are concentrated mainly in the UK, in the form of October’s MPC meeting minutes and the latest CBI Quarterly Industrial Trends survey. The Bank of England left Bank Rate on hold at 0.5% on 8 October, while the Committee voted to continue with its programme of asset purchases totalling £175bn. The previous set of minutes revealed that those members who had preferred a larger stimulus in August, sided with the majority in September, although the text noted “a larger asset purchase programme could still be justified”.

For us, this broad assessment seems unlikely to have changed. Indeed, we anticipate a further expansion in the Bank’s asset purchase programme at next month’s MPC meeting. Beyond this, today sees a variety of Fed speakers (see calendar below), along with the latest Beige Book of regional economic conditions.

Lloyds TSB Corporate Markets Economic Research

For more information: Emile Abu-Shakra Manager, Media Relations Lloyds TSB Group Media Relations Tel 020 7356 1878 http://www.lloydstsbcorporatemarkets.com/

Lloyds TSB Archive

Only logged in users are allowed to post comments. Register/ Log in

The Market Oracle is a FREE Financial Markets Forecasting & Analysis web-site.
(c) 2005-2024 MarketOracle.co.uk (Market Oracle Ltd) - Market Oracle Ltd asserts copyright on all articles authored by our editorial team and all comments posted. Any and all information provided within the web-site, is for general information purposes only and Market Oracle Ltd do not warrant the accuracy, timeliness or suitability of any information provided on this site. nor is or shall be deemed to constitute, financial or any other advice or recommendation by us. and are also not meant to be investment advice or solicitation or recommendation to establish market positions. We do not give investment advice and our comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to enter into a market position either stock, option, futures contract, bonds, commodity or any other financial instrument at any time. We recommend that independent professional advice is obtained before you make any investment or trading decisions. By using this site you agree to this sites Terms of Use. From time to time we promote or endorse certain products / services that we believe are worthy of your time and attention. In return for that endorsement and only in the cases where you purchase directly though us may we be compensated by the producers of those products.