Weekly Market Update

News this past week:

  • Dollar strengthens as market prepares for Fed rate hike
  • Inflation expectations rise in the UK
  • Bond yields rise amid tapering rumours
  • Chinese trade data disappoints, whilst inflation rises
  • Eurozone industrial production beats expectations

James Klemspter (CFA) of Momentum Global Investment Management shares his view:

Consumer goods producer Unilever and retailer Tesco had a very public spat last week over the suggestion that the former’s prices needed to go up to reflect the impact of a weakened sterling on input costs.  Since the surprise Brexit vote sterling has fallen 16% on a trade weighted basis implying that the UK’s imports have become more expensive.  This, coupled with an increase in dollar terms of 35% in oil year to date (which translates to over 60% in sterling terms), suggests that the UK should expect to see growing inflationary pressures such as these in coming months.

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