Worldwide Financial Planning

It's a question I get asked every election, and this answer, while ‘amazingly exciting’, is equally of a cardboard licking, palette numbing blandness, but read on because I did loads of research!

The FOMC meeting came off the back of a decent CPI print. May’s inflation data came in softer than consensus expectations with headline CPI decelerating slightly to 3.3% versus 3.4% in April.

The European Central Bank (ECB) cut interest rates by a well communicated 25bps at their meeting, taking their key deposit rate to 3.75%, main refinancing rate to 4.25% and marginal lending facility to 4.5% - from 4.00%, 4.5% and 4.75% respectively.

However, the positivity in bond markets this week has more to do with hopes that the Federal Reserve may be able to cut rates after all. The market’s ability to forecast Federal Reserve rate cuts is only slightly less reliable than the Conservatives’ analysis of their own and Labour’s tax policies.

I've mentioned the potential impact that short sellers have on the stock because a declining share price is fodder for them. Short selling is where investors bet on a share price falling and profit if it then does so.

Leading the case for higher for longer rates is Neel Kashkari, president of the Minneapolis Federal Reserve bank, who warned that several months of sustained disinflation are needed before the US Fed is able to cut. The European Central Bank signalled that a June rate cut is very much on the cards. However, rising inflation has also returned to the Eurozone and this added to the gloomy outlook.