Mortgage rates dip below 5% as NatWest, TSB, Nationwide and other lenders reduce their deals in a ‘growing rate war’
Neil Wilson, chief market analyst at Finalto Trading, has looked at the moves in financial markets this morning.
Stocks are ending the week under pressure as bond yields lurch to fresh cycle highs following the Fed’s hawkishness and a raft of central bank announcements that cement the view that (in most cases) rates are going to stay higher for longer. The benchmark US 10-year Treasury note yield hit 4.5%, the highest in 16 years as investors fretted about inflation and the ability of central banks to ease in a slowing economy, whilst the two-year rose above 5.2%, its highest since 2006.
This morning European stocks are generally lower, taking cue from a very poor performance on Wall Street saw the S&P 500 notch its worst day since March. The FTSE 100 is heading for a weekly decline of around half a percent, whilst the Dax and CAC are looking at 2-3% drops.
The German services PMI stopped its slump and nudged up near 50 in September. This is a pleasant surprise, to be sure. However, in terms of growth it means that activity remained broadly flat following the decline recorded in August. Therefore, our nowcast for services, which considers the PMI data, continues to signal a drag in the third quarter.
It’s no secret that the German manufacturing sector has been going through the wringer lately. The HCOB PMIs, however, indicate that things aren’t going downhill as fast as before, with the decline in new orders slowing down. In addition, the reduction in purchasing activity is losing momentum. Still, our nowcast for manufacturing production, which includes the PMI figures, is hinting at a drop of more than 2% compared to the second quarter.
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