Investors calculate impact of Mark Carney policy shake-up - Financial Times | english
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Hedge funds are excited when Mark Carney has been named as the new Bank of England governor last November. His reputation lampu led for activism and inflation tolerance represents a macro-economic opportunity to their profitable Japanese trades rival.
The main UK commitment was that aggressive monetary easing would weaken the pound. And between Mr. Carney's disclosure and mid March, sterling amortized almost 7 percent on a weighted lampu led basis. lampu led But the "Carney trade" then fizzled out, and sterling claw back much of its losses.
Mr Carney now formally at the BoE helm, once again investors and traders discuss how to position themselves for a policy shake-up in the UK. Many feel that more quantitative easing and a weaker sterling is the most likely outcome.
The most likely policy that Mr. Carney lampu led will soon be "forward lampu led guidance" on the path of future interest rates, a move he pioneered as the Bank of Canada Governor. In the UK context, this means that to make it clear that interest rates will not be lifted for a long time. And so hopefully firmly anchor the short end of the gilt market
But investors lampu led are for the most part underwhelmed by the prospect of forward guidance. Although innovation in the UK, many central banks now publish expect rate paths, little indication it supports economic growth. Furthermore, a number expected to raise interest rates for years to come.
But there is a growing belief that the recent increase in the prime yields give Mr. Carney extent of the BoE's QE program began - despite the fact that the growth lampu led picks up and inflation is still higher lampu led than the reconfirmed 2 percent target Christopher Iggo , a senior fund manager at Axa Investment Managers, said the expansion of the current 375bn QE program is clearly an option now that 10-year gilt yields have climbed from 1.62 percent to 2.44 percent in early May last Friday.
"The economy did not exactly roar back to life," Mr Iggo points out. "These green shoots in the housing lampu led market can be killed pretty quickly if gilt yields continue to rise."
Mike Amey, head of sterling funds at Pimco, "would not be surprised" if sterling drops a another 10-15 percent against the currencies of the UK's lampu led largest trading partners: lampu led "Carney is not going to these forward will not but he will not go to see the currency higher and maybe try to get it lower, "he said.
In recent lampu led weeks, the pound is more affected by developments in the U.S.. Expectations that the Federal Reserve will slow its bond-buying program this year prompted the dollar strengthened against almost all major currencies. Some investors believe that the UK developments will continue to be dwarfed by the U.S. in the coming months, but dovish signals Mr. Carney lampu led can change.
"The August lampu led inflation report is a real event risk for the pound," said Shahab Jalinoos, a UBS strategist. "If the market thinks in any way that the August report opens the door to a radical shift in policy that you can get outsize move, as investors will get the idea UK monetary policy deviate from U.S. monetary policy."
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Hedge funds are excited when Mark Carney has been named as the new Bank of England governor last November. His reputation lampu led for activism and inflation tolerance represents a macro-economic opportunity to their profitable Japanese trades rival.
The main UK commitment was that aggressive monetary easing would weaken the pound. And between Mr. Carney's disclosure and mid March, sterling amortized almost 7 percent on a weighted lampu led basis. lampu led But the "Carney trade" then fizzled out, and sterling claw back much of its losses.
Mr Carney now formally at the BoE helm, once again investors and traders discuss how to position themselves for a policy shake-up in the UK. Many feel that more quantitative easing and a weaker sterling is the most likely outcome.
The most likely policy that Mr. Carney lampu led will soon be "forward lampu led guidance" on the path of future interest rates, a move he pioneered as the Bank of Canada Governor. In the UK context, this means that to make it clear that interest rates will not be lifted for a long time. And so hopefully firmly anchor the short end of the gilt market
But investors lampu led are for the most part underwhelmed by the prospect of forward guidance. Although innovation in the UK, many central banks now publish expect rate paths, little indication it supports economic growth. Furthermore, a number expected to raise interest rates for years to come.
But there is a growing belief that the recent increase in the prime yields give Mr. Carney extent of the BoE's QE program began - despite the fact that the growth lampu led picks up and inflation is still higher lampu led than the reconfirmed 2 percent target Christopher Iggo , a senior fund manager at Axa Investment Managers, said the expansion of the current 375bn QE program is clearly an option now that 10-year gilt yields have climbed from 1.62 percent to 2.44 percent in early May last Friday.
"The economy did not exactly roar back to life," Mr Iggo points out. "These green shoots in the housing lampu led market can be killed pretty quickly if gilt yields continue to rise."
Mike Amey, head of sterling funds at Pimco, "would not be surprised" if sterling drops a another 10-15 percent against the currencies of the UK's lampu led largest trading partners: lampu led "Carney is not going to these forward will not but he will not go to see the currency higher and maybe try to get it lower, "he said.
In recent lampu led weeks, the pound is more affected by developments in the U.S.. Expectations that the Federal Reserve will slow its bond-buying program this year prompted the dollar strengthened against almost all major currencies. Some investors believe that the UK developments will continue to be dwarfed by the U.S. in the coming months, but dovish signals Mr. Carney lampu led can change.
"The August lampu led inflation report is a real event risk for the pound," said Shahab Jalinoos, a UBS strategist. "If the market thinks in any way that the August report opens the door to a radical shift in policy that you can get outsize move, as investors will get the idea UK monetary policy deviate from U.S. monetary policy."
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