Last Week In Review: A Financial Roundup
Monday
Fiscal rules and investment in the upcoming Budget
UK Chancellor, Rachel Reeves is prioritising infrastructure investment to stimulate economic growth ahead of the upcoming October budget which she has dubbed the “Budget for investment”.
Reeves aims to counteract “low investment” but faces constraints due to strict fiscal rules that limit borrowing based on public debt. She’s suggested that investment could be funded through higher taxes or spending cuts, though relaxing fiscal rules remains an option.
The Labour government is exploring changes to the fiscal framework, either by re-evaluating how debt is measured or emphasising Public Sector Net Worth (PSNW), which considers both assets and liabilities. While alternative measures like PSNW could justify higher borrowing for investment, they carry risks. Many public assets are difficult to value or sell, and increasing debt could provoke negative market reactions.
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Tuesday
Most banks expect gold's bull run to persist into 2025
Gold has surged over 27% this year, gaining nearly $570 per ounce, and reached an all-time high of $2,639.95/oz.?
Major banks predict that gold’s record-breaking rally will continue into 2025, driven by increased inflows to exchange-traded funds (ETFs) and anticipated interest rate cuts from central banks, including the U.S. Federal Reserve.?
Financial analysts have highlighted that while strong physical demand from China and central banks has supported gold prices recently, investor flows will be crucial to sustaining the rally. Despite gold’s recent highs, analysts believe there is room for further growth over the next six to 12 months. The upcoming U.S. presidential election could increase market volatility, potentially driving more investors toward gold as a safe-haven asset.
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Wednesday
Global economy is stabilizing – but weakness remains. Here's the economic outlook from chief economists
The global economy is stabilizing despite continued economic uncertainty according to the latest report by The WEF’s Chief Economists.?
Most economists either expect conditions to remain unchanged or weaken over the next year. While inflation is easing and global commerce shows resilience, high public debt and interest payments pose significant risks to both advanced and developing economies.?
Regional outlooks vary, with the U.S. projected to experience moderate growth, Europe showing signs of improvement, and South Asia expected to outperform. However, China's weak economic outlook contrasts with stronger prospects in other parts of Asia, the Middle East, and Africa.
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Inflation is decelerating globally, and most economists predict looser monetary policies. However, domestic political obstacles and a lack of global collaboration hinder efforts to create a more balanced growth agenda.?
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Thursday
Pound Rally to End as Market Is Wrong on BOE Path, Candriam Says
The British pound’s recent strength may be short-lived, according to Candriam Fund Manager,? Jamie Niven.?
Niven predicts the pound could decline sharply as markets begin pricing in deeper interest rate cuts in the UK. He is preparing to short the pound against the euro, citing the wide gap between interest rate expectations for the UK and the eurozone. While the Bank of England (BOE) is expected to lower rates slowly, traders still see the UK benchmark rate falling to 3.4%, compared to less than 2% in the eurozone.
With monetary policy expectations diverging between the UK and the eurozone, Niven believes the UK’s rate curve could drop quickly, leading to a potential sharp fall in the pound, which has gained 3.8% against the euro this year.
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Friday
Bitcoin bucks seasonal jinx with one of best September gains
Bitcoin is on track for one of its biggest September gains, rising over 10%, thanks to global interest rate cuts led by the U.S. Federal Reserve.?
Rate reductions from central banks like the European Central Bank and the People’s Bank of China have increased demand for riskier assets, including smaller cryptocurrencies, which have surged over 20%.?
Currently trading near $65,334, the cryptocurrency might face resistance due to expiring options contracts. Nevertheless, it has risen 56% in 2024, bolstered by inflows into U.S. Bitcoin exchange-traded funds.
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GSK Ilkest Branch Financial Director
4 周I think this is a very good sign.