The noise
-
Chancellor Jeremy Hunt announced his Autumn Statement on Thursday in a plan which would aim to “rebuild the economy”. Changes include the threshold for the 45% additional rate of tax being cut from £150,000 to £125,140 and a range of tax threshold freezes. Forecasts released by the Office for Budget responsibility said that the UK economy would shrink by 2% over the totality of the recession which is expected to last just over 12 months.months.
-
The UK Inflation Rate edged higher in November rising to 11.1% ahead of the Bank of England’s forecast of 10.9% with the main contributor being soaring energy bills and the increased cost of food. As inflation has now hit a 41-year high, this places heightened pressure on the government and Bank of England to act. Over in the US, the Consumer Price Index showed inflation rising at its slowest pace since January of this year, cooling to 7.7% year-on-year and 3.7% month-on-month.
The numbers
The nuance
Whilst unpopular and putting more pressure on people when times are already hard has returned some order to the gilt market and the panic caused by LDI pension funds has abaited, inflation remains an issue as per the latest monthly prints, but there are glimmers of hope as manufacturers are at least seeing less pricing pressure.
Despite concerns around corporate earnings and how a consumer under such pressure will continue to spend, Q3 earnings broadly came in relatively positive versus expectations of concern. It's clear that the global economy needs to adjust and adapt, a process which will continue to take some time. We acknowledge the recent redundancies across a wide variety of firms and see that higher interest rates are starting to have an impact. However, all eyes remain fixed on inflation numbers as ultimately this will determine how long this transitionary period will last.
Quote of the week
New Zealand property owner stands out with 'buy my house, get free Tesla' offer.
New Zealand house prices have seen their biggest drop in 30 years and were down 10.9% in October - their 11th consecutive month of falling. A New Zealand property owner is hoping to stand out from other sellers by offering a free Tesla to the person who buys their home. The house - a seven-bedroom, five-bathroom property - has reportedly been on the market for weeks. The owner has thrown in the offer of a new car to try to sweeten the $1.8m (£928,000) deal.
"Rising mortgage rates continue to weigh on house prices and sale activity," said Kiwibank economists in a note. So, the owners of 22 Dungloe Avenue, Flat Bush, had to drop the price and do something to stand out from the other 400+ listings in the Auckland suburb. The price of the car is a "bonus" rather than adding to the market value, he added.
After purchasing the property, the new owner would get to pick the car's colour - the Tesla Model Y has five options - and it will then be ordered and shipped straight from the manufacturer.
With room to park six cars, the house also has a granny flat on the bottom floor, which would allow its new owners space for any extended family. House prices in New Zealand rose roughly 40% over the pandemic before peaking last November at levels repeatedly described by the central bank as unsustainable. However, as the central bank has aggressively hiked the cash rate, and mortgage rates have followed suit, prices have come off sharply.
Many economists expect that with the cash rate forecast to go higher, house prices still have further to fall.
Source: Sky News
All investment views are presented for information only and are not a personal recommendation to buy or sell. Past performance is not a reliable indicator of future returns, investing involves risk and the value of investments, and the income from them, may fall as well as rise and are not guaranteed. Investors may not get back the original amount invested. Any views expressed are based on information received from a variety of sources which we believe to be reliable, but are not guaranteed as to accuracy or completeness by atomos. Any expressions of opinion are subject to change without notice.