Wealthy Nations Daily Update - ECB/FOMC/UK Budget

As we start the new week markets have been relatively quiet, which is somewhat expected given the big moves witnessed post the ECB meeting last Thursday. At that meeting the ECB announced it was cutting the main refinancing rate to zero, further reducing the deposit rate to minus 0.4% as well as expanding QE to EUR80bn a month. At the press conference after the announcement Mario Draghi, the ECB Head said “Rates will stay low, very low, for a long period of time and well past the horizon of our purchases”. When grilled about how low rates could actually go he said  “From today’s perspective and taking into account the support of our measures to growth and inflation, we don’t anticipate that it will be necessary to reduce rates further. Of course, new facts can change the situation and the outlook.” Along with the ECB actions last week,  tomorrow we have the Bank of Japan (BoJ) Monetary Policy Statement, where the market anticipates no changes to the policy rate after the committee’s decision to move into negative rate territory at the last meeting. Haruhiko Kuroda, the BoJ Governor’s press statement may make for interesting reading.

On Wednesday we also have the FOMC March rate decision. Again the market is anticipating that the committee will say put, with the chances of a rate movement being as low as 4% now, according to the futures market. As we have mentioned before, financial conditions have eased since the last rise in December and the FOMC will be keen to keep their options open. As always data dependency will likely be the key theme.

On the same day as the FOMC announcement, here in the UK we have the budget. Hard at work composing his 8th budget and seemingly distracted by the ruckus, Chancellor George Osborne tweeted “Trying to write my Budget,despite noisy episode of @BBC_TopGear being filmed outside the Horse Guards Parade. Keep it down please @chrisevans.” One has to wonder if this is the only noise he will encounter after he warned that the UK has to "act now rather than pay later" and that the world is "a more difficult and dangerous place" saying further spending cuts are planned. On the BBC he said “My message in this Budget is that the world is a more uncertain place than at any time since the financial crisis and we need to act now so we don't pay later," adding "That is why I need to find additional savings equivalent to 50p in every £100 the government spends by the end of the decade, because we've got to live within our means to stay secure”.

Please read this important information before proceeding. It contains legal and regulatory notices relevant to the information on this site.

This website provides information about Stratton Street Capital LLP ("Stratton Street"). Stratton Street is authorised and regulated by the UK's Financial Conduct Authority. The content of this website has been prepared by Stratton Street from its records and is believed to be accurate but we do not accept any liability or responsibility in respect of the information of any views expressed herein. The information, material and content provided in the pages of this website may be changed at any time by us. Information on this website may be out of date and may not be updated or removed.

The website is provided for the main purpose of providing generic information on Stratton Street and on our investment philosophy for the use of financial professionals in the United Kingdom that qualify as Professional Clients or Eligible Counterparties under the rules of the United Kingdom Financial Conduct Authority (the "FCA"). The information in this website is not intended for the use of and should not be relied on by any person who would qualify as a Retail Client. Products and services referred to on this website are offered only at times when, and in jurisdictions where, they may be lawfully offered. The information on this website is not directed to any person in the United States. The provision of the information on this website does not constitute an offer to purchase securities to any person in the United States (other than a professional fiduciary acting for the account of a non-U.S person) or to any U.S. person as such term is defined under the Securities Act of 1933, as amended.

The website is not intended to offer investors the opportunity to invest in any Alternative Investment Fund ("AIF") product. The AIFs managed by Stratton Street are not being marketed in the European Economic Area ("EEA") and any eligible potential investor from the EEA who wishes to obtain information on the AIFs will only be provided with materials upon receipt by Stratton Street of an appropriate reverse solicitation request in accordance with the requirements of the EU Alternative Investment Fund Managers Directive ("AIFMD") and national law in their home jurisdiction. By proceeding you confirm that you are not accessing this website in the context of a potential investment by an EEA investor in the AIFs managed by Stratton Street and that you have read, understood and agree to these terms.

No information contained in this website should be deemed to constitute the provision of financial, investment or other professional advice in any way. The website should not be relied upon as including sufficient information to support any investment decision. If you are in doubt as to the appropriate course of action we recommend that you consult your own independent financial adviser, stockbroker, solicitor, accountant or other professional adviser. Past performance is not necessarily a guide to the future. The value of investments and the income from them may go down as well as up. An application for any investment or service referred to on this site may only be made on the basis of the offer document, key features, prospectus or other applicable terms relating to the specific investment or service.

Where we provide hypertext links to other locations on the Internet, we do so for information purposes only. We are not responsible for the content of any other websites or pages linked to or linking to this website. We have not verified the content of any such websites. Such websites may contain products and services that are not authorised in your jurisdiction. Following links to any other websites or pages shall be at your own risk and we shall not be responsible or liable for any damages or in other way in connection with linking.

By using this site, you should be aware that we may disclose any information that we hold about you to any regulatory authority to which we are subject, or to any person legally empowered to require such information.

This website uses cookies to improve user experience, by clicking the "I Accept" button below means you consent to the use of cookies on our website.