Odds strengthen that US will hike rates
Rates look almost certain to rise in the US this week after the release of strong February employment data.
We’ve been keeping a close eye on US rates, concerned that equity markets could be hit if rates go up quicker than expected. Currently, however, I don't think higher rates will spell disaster for equities, as monetary policy is set to be tightened against a backdrop of stronger US and global economies.
So far, equity markets seem unfazed by the hike in interest rate prospects. This is being driven by the realisation that global growth will likely be stronger than expected this year, which has helped boost equities.
- sponsor - Wealth Know How
Wealth Know How is the online network helping people manage their wealth through financial education. Whether you are looking for simple ways to better manage your cash, or you are after a complete strategy on how to save for retirement, we can help you understand your options. It is important to have a vision for your future, but its knowledge not dreams that will ultimately deliver financial success.
Published on 15 Mar 17
-
-
Venezuela tension heats up
Duration 03:16
-
Aussie dollar surprises market
Duration 03:10
-
Markets climb as investors watch US healt...
Duration 02:31
-
-
Rates look almost certain to rise in the US this week after the release of strong February employment data.
We’ve been keeping a close eye on US rates, concerned that equity markets could be hit if rates go up quicker than expected. Currently, however, I don't think higher rates will spell disaster for equities, as monetary policy is set to be tightened against a backdrop of stronger US and global economies.
So far, equity markets seem unfazed by the hike in interest rate prospects. This is being driven by the realisation that global growth will likely be stronger than expected this year, which has helped boost equities.Sponsor - Wealth Know How
Wealth Know How is the online network helping people manage their wealth through financial education. Whether you are looking for simple ways to better manage your cash, or you are after a complete strategy on how to save for retirement, we can help you understand your options. It is important to have a vision for your future, but its knowledge not dreams that will ultimately deliver financial success.
-
Venezuela tension heats up
Duration 03:16
-
Aussie dollar surprises market
Duration 03:10
-
Markets climb as investors watch US healthcare bill
Duration 02:31
We’ve been keeping a close eye on US rates, concerned that equity markets could be hit if rates go up quicker than expected. Currently, however, I don't think higher rates will spell disaster for equities, as monetary policy is set to be tightened against a backdrop of stronger US and global economies.
So far, equity markets seem unfazed by the hike in interest rate prospects. This is being driven by the realisation that global growth will likely be stronger than expected this year, which has helped boost equities.
Despite the positive data, the US Dollar weakened last week. This followed comments by European Central Bank President, that the ECB no longer saw 'urgency' for further expansionary measures as the risk of deflation had been overcome.
The ECB reiterated its commitment to keeping interest rates at current or lower levels for an extended period. With growth in the Eurozone holding up well and headline inflation ahead of target, there is pressure for the ECB to provide more forward guidance on interest rates.
The ECB is unlikely to taper its asset purchases program or raise interest rates until core inflation, and particularly wage growth, are rising. As such, European interest rates are unlikely to be increased in 2017.
With inflation picking up globally, the Reserve Bank of Australia will be watching this keenly. Australia does tends to import inflation. Also, rates cannot be cut to weaken the Aussie Dollar and make Australia more competitive. This environment will limit the ability of the RBA to cut rates this year, and indeed, we don’t expect any further cuts in 2017.