This is now the longest uninterrupted expansion since 1854. As the central banks have injected liquidity using Quantitative Easing to keep the economy going.
The UK current account deficit has increased
The deficit has risen to £30 billion from £23.7 billion in the final quarter of 2018. This is equivalent to 5.6% of GBP. This might have been down to Brexit stockpiling.
US Inflation drops to 1.8%
Inflation in the US was 1.8% YoY in May, coming in below the consensus forecasts. Consumer price inflation slowed from the 2% pace recorded in April, which coincided with the Federal Reserve’s 2% inflation target. In addition, in core CPI inflation (a gauge that excludes volatile prices, such as fuel, etc.) also slowed to 2% YoY. Benign inflation combined with slowing growth and escalating trade tensions could increase pressure on the Federal Reserve to bow to the market and cut interest rates this year. The market now takes it for granted that the Jerome Powell-led FOMC will slash the Fed funds futures by 25 bp by the end of July and initiate an easing cycle.
Tesco has pulled out of the mortgage market
Tesco has pulled out of the mortgage market amid a price war among lenders that has pushed down rates for borrowers and piled pressure on smaller providers. The 23,000 mortgage customers of the supermarket’s banking business will not see any immediate change to existing arrangements.
Interest-only Mortgages
Yorkshire Building Society has become the latest big name to launch an interest-only mortgage. If you have a reasonable deposit saved up please give us a call.
Interest-only mortgages were once common but virtually disappeared after the financial crisis, amid fears that many borrowers were not setting aside enough money to repay their debt. Borrowers do not repay any capital during the course of the loan, so when their mortgage term ends they need to pay back their equity.
Under new lending criteria, borrowers have to show lenders that they have a repayment strategy in place.
There were twice as many interest-only products on the market earlier this month as there were six years ago, according to Moneyfacts.
UK savings level lowest of all OECD countries
Mr Micawber would not be pleased. British households, companies and government together are spending approximately 5% more than we are earning. We are now worse than any other OECD country; even below the US who spend 1%.
UK employment
The number of people in work rose by 179,000 to 32.71 million in the three months to the end of February, the highest since 1971. The Office for National Statistics said that jobless numbers fell by 27,000 to 1.34 million, putting the unemployment rate at 3.9 per cent, the lowest since 1975.
U.S. Q4 GDP revised down
The U.S. economy showed further signs of slowing as the 4Q18 GDP figure was revised down to 2.2%, which was significantly lower than the 2.6% initially reported. After business investment, consumer spending and local government expenditures were accounted for, the final GDP figure came in below economists forecast of 2.5%. The revised figure did not change the full year GDP growth rate, which remains at 2.9%.
House price growth slows
Annual house price growth has slumped to 1.7 per cent in January 2019 – the lowest rate since 2013. The latest House Price Index from the Office for National Statistics showed the average UK house price was £228,000 in January 2019, an increase of 1.7 per cent over the year, but down from the 2.2 per cent annual growth in December 2018.
Office for National Statistics Report
Some good numbers for a change. More people were employed today since records began in 1971. The unemployment rate also dropped to a low of 3.9% for the first time since the dark days of the 1970’s.