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Economic improvement signals end for QE
It seems the days of rock-bottom interest rates may be coming to an end sooner than initially anticipated, and the London equity market is off over 1% as a result. We are now moving from a time when ‘bad news is good news’ into the next phase, in which ‘good news is bad news’. The drop in unemployment and increased growth guidance from the Bank of England implies that the QE gravy train may be reaching the end of its journey. When Mr Carney took over as governor of the Bank of England in July, he suggested that interest rates would remain unchanged for three years; now a rate change could happen within 18 months.
US traders await Yellen statement
In the US, the Dow is down 73 points at 15,677. Traders are realising that the era of record-low interest rates and stimulus packages on both sides of the Atlantic is drawing to a close. The unusually high non-farm payrolls figure triggered tapering fears, and investors are now looking ahead to Janet Yellen’s statement tomorrow. Ms Yellen will testify in front of the Senate Banking Committee, and her words could give us a flavour of her policies to come in the New Year.
Gold on the rise
Gold is higher due to short covering. The precious metal is off a one-month low ahead of Janet Yellen’s statement tomorrow.
Sterling gets a boost
The pound is having a stellar day, as a drop in the jobless rate and encouraging words from Mark Carney helped the currency.