UK GDP in Line with Expectations
The major news out today is the Q3 GDP out of the UK. As predicted, this rose by 0.7%, lower than last quarters 0.9% but still showing growth and this is something that most of the rest of the world is jealous of as they are experiencing a slowdown. The GDP data is split between poor PMI, housing data and stronger service data. Due to the Eurozone slowdown, we should expect UK growth to be impacted but it is expected to be at 3% for the year. There is still no reason to expect rate hikes any time soon as the BoE Deputy Governor commented on how interest rates will rise in a limited and gradual manner once “headwinds to the UK economy dissipate”.
At noon on Sunday, we will learn the results of the ECBs year long stress test against the 130 biggest banks.This will undoubtedly have a huge effects on the markets and there are rumours that 11 banks from 6 countries have failed. The ECB has staked its reputation on getting this right as its 2 previous attempts have failed to show problems at lenders which later failed.
The market is also rather jittery in general at the moment. The first case of Ebola in New York could be the partial cause of this panic, but it is more likely to be just symptomatic of how traders are feeling about the current state of the markets.
There are some new home sales data out of the US today, but the interesting thing will be how the markets treat the UK GDP data.