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Morning papers: BoE to slash growth forecasts to almost 0%

The morning papers brought to you by Investment Adviser: Wednesday August 8 2012.

By Simona Stankovska | Published Aug 08, 2012 | comments

The Bank of England is expected to slash UK growth forecasts to close to zero from the 0.8 per cent predicted in May when it releases its quarterly inflation report later today, reports The Telegraph.

The central bank will also downgrade inflation forecasts amid a weak economy in a double-dip recession that has been hit by the eurozone crisis and slowing domestic demand.

Presenting his last report in May, he said the UK would not be “unscathed” by the eurozone “storm”.

StanChart hits back at Iran claims

Standard Chartered hit back hard on Tuesday against US regulatory attempts to cast it as a “rogue institution” for allegedly breaching sanctions on Iran, describing any transgressions as “small clerical errors”, reports the Financial Times.

But the British bank’s “strong rejection [of] the portrayal of facts” on Monday by New York state’s Department of Financial Services failed to convince investors.

Global slump risk falls as world money rebounds

The first green shoots have begun to emerge in money supply data from across the world, raising hopes of a tentative global recovery by later this year, reports The Telegraph.

Data collected by Simon Ward at Henderson Global Investors show that a key gauge of global money – six-month real M1 – has picked up at last after a drastic slowdown over the early spring.

The combined growth rate for the G7 economies and E7 emerging powers levelled out at 1.6 per cent in May and rebounded at 2.5 per cent in June, though China and India are still contracting.

Coalition tries to end ‘worst domestic’

David Cameron and Nick Clegg will attempt to dust themselves off after a tumultuous few months when MPs come back in the autumn, launching what they call a “midterm review” of the coalition, reports the Financial Times.

The prime minister and his deputy will set out in the document what they believe has been achieved from the 2010 coalition agreement and how their parties intend to complete the rest.

Japan trade deficit leaps in first half

Japan’s trade deficit quintupled in the first half of 2012, as soaring fuel bills after the Fukushima nuclear crisis were compounded by lower exports, reports the Financial Times.

Preliminary figures from the finance ministry on Wednesday showed a record trade deficit for the first six months of this year of Y2.5trn (£23.7bn), five times as wide as the Y500bn deficit posted in the same period a year earlier.

Yields on US junk-rated debt hit new lows

Demand for US junk-rated debt has propelled yields towards new lows, as investors seeking returns in a low-interest rate environment have been attracted by a record number of deals so far this month, reports the Financial Times.

The Barclays High Yield index has dropped to 6.63 per cent, just 2 basis points shy of its all-time low of 6.61 per cent set in May 2011. So far this year, high-yield bonds have returned 9.9 per cent, on pace to more than double last year’s gain of 4.2 per cent.

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