KB News Bites: Contacts lenses

Contacts lenses: In the three months to May, the UK unemployment rate fell to 4.9%, dipping below the Bank of England’s key 5% “natural rate” for the first time since the financial crisis. Significantly, this is all while the proportion of people aged 16 to 64 in work was 74.4%, the highest recorded. Furthermore, the Agents’ Summary – a BoE “intelligence” report compiled from discussions with 700 businesses contacts – showed that a majority of firms did not expect an immediate “Brexit” impact on their investment or hiring plans. A third did, however, expect a negative impact over the next year. (21/07)

Ill at easing: At today’s European Central Bank meeting, policymakers are expected to discuss tinkering the Bank's €80 billion per month quantitative easing program. Currently, a self-imposed restriction prevents the ECB from buying bonds with negative yields below the ECB's -0.40% deposit rate. However, given the huge downward shift in the yield curve for government bonds post-"Brexit”, over 50% of German bunds are now ineligible. At this rate, it may run out of eligible bonds to buy in months. (21/07)

Crusin' for a bruisin: The US political landscape was filled with rancour anew as US Senator Ted Cruz refused to endorse Republican presidential nominee Donald Trump at the party's convention last night during his speech, something usually taken for granted. Mr. Cruz drew angry boos from Trump supporters, once again highlighting the deep ruptures within the Republican party, and the country. Mr. Cruz's wife even had to be escorted away from the stage as some feared for her safety amidst shouts of "Goldman Sachs", in reference to her employment at the investment bank. (21/07)

A turn for the moderately worse: The International Monetary Fund has cut its global growth estimate from 3.2% to 3.1% for 2016, and from 3.5% to 3.4% for 2017, all due to “Brexit”. UK growth projections have been reduced moderately by 0.2% in 2016 to 1.5%, but nearly cleaved in half for 2017 from 2.2% to 1.3%. The silver lining is that the UK has only been relegated to the IMF’s “moderately worse” projection – avoiding its rather ominous sounding “much worse” scenario – due to the better than expected market reaction since the referendum. (20/07)

One Flew Over the Coup-Coup's Nest: An attempted coup d'état in Turkey over the weekend has been decisively quashed, with nearly 6,000 military "plotters" in custody. While Turkey's military has conducted a number of successful coups in times past, this attempt failed as it did not have widespread support from within the military itself, and has been described as "amateurish" by experts. It also did not appear to have much public, political or bureaucratic support. Ironically, President Recep Tayyip Erdogan, may now be in a position to increase his power by further defanging the military. (18/07)


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