Did that feel like the shortest day of the year?
In the UK Government borrowing figures were worse than expected in November; £14.2bn, up by £1.3bn compared with November 2014 prompting talk of George Osbourne’s Autumn Statement target of reducing Government borrowing next year being pretty difficult to hit already. It must be said that at this point last year the coffers were swollen by huge fines levied for financial misconduct by Banks. Total borrowing for the financial year to date is now £66.9bn, down £6.6bn from the same point last year. The independent Office of Budget Responsibility (OBR) estimates that borrowing for the whole of the financial year 2015-16 will be £68.9bn – excluding support for public sector banks, and also excluding new changes to the treatment of housing associations. Sterling slumped against it’s peers across the board as more borrowing ultimately means more interest repayment commitments.
US GDP figures showed the US economy grew at an annual pace of 2.0% in the third quarter, according to official figures, slightly slower than the previous estimate of 2.1%. The revision still indicates that the world’s biggest economy is growing healthily. Inventories reached record levels in the US in the first half of the year and high stocks mean manufacturers replace these unsold items at a slower rate. Consumer spending, by far the largest element of the US economy, grew by 3% in the third quarter. The pace is almost half the 3.9% annualised rate recorded in the second quarter of the year, but that rate was boosted by businesses catching up ground lost during the cold winter weather at the start of 2015.
The Euro pulled back another 1% versus Sterling yesterday, unable to convincingly break the resistance at 1.3500 it opens this morning nearly a cent higher than yesterday’s low. With the low trading volumes at Christmas a little bad news goes a long way and at the moment the Single Currency is benefiting from this. Greece were granted a further 1bn Euros yesterday. The European Stability Mechanism (ESM) approved the first tranche of bailout money after the new rescue package was agreed back in August.
Data to watch: 9.30am UK Gross Domestic Product (Q3) Quarter on Quarter and Year on Year. 1.30pm US Durable Goods Orders (Nov) & excluding, Personal Consumption Expenditures – Price Index (Nov) Quarter on Quarter, Year on Year and Core. 3pm US New Home Sales