Weekly Market Update 11/10/2024
Data released on Thursday by the Bureau of Labor Statistics showed US inflation fell to 2.4% in September, below the August figure of 2.5%, but above analyst expectations of 2.3%. However, the continued easing of inflation has reinforced expectations of a quarter percentage point rate cut by the Federal Reserve in November, with markets pricing in a 90% chance of this move.
Following months of stiff competition in the UK mortgage market, lenders have started to pull their cheapest deals this week as interest rate swaps, which are how mortgage rates are priced, moved higher off the back of strong economic data. Concerns around chancellor Rachel Reeve’s October budget also added pressure to UK government bond yields, which are closely linked to swap rates, adding another headwind to mortgage rates.
On Friday, the Office for National Statistics revealed the UK economy grew by 0.2% in August, meeting analyst expectations after two months of stagnation. This was due to a broad-based increase in services, manufacturing, and construction. However, although the economy has returned to growth, this remains at a much slower pace than during the first half of 2024 when the economy bounced back from the technical recession at the end of last year, as mortgage rates dropped and price pressures eased.
Andrea Wood, Chartered MCSI
Investment Manager
