The UK approach to QE is more transparent than elsewhere.QE has worked, consequences are challenging to manage.We have been clear we will not sell gilts into a dysfunctional market.Last week’s MPC vote on QT pace was a pragmatic approach to reducing footprint in markets.I put higher weight on the need to get out of QE.I have more faith that the market is functioning better.As a reminder, the BoE slowed the pace of QT last week from £100 billion to £70 billion per year to curb rising bond yields. The two dissenters for were Mann and Pill. The former wanted to slow it to £62 billion, while the latter of course to keep it steady at £100 billion. This article was written by Giuseppe Dellamotta at investinglive.com. Source: investinglive.com (Read Full Article)

The US Dollar (USD) is weakening slightly on Monday, with the US Dollar Index (DXY) losing 0.2% in the day, as traders await the release of the flash S&P Global Purchasing Managers Indexes (PMIs) for September, scheduled for Tuesday at 13:45 GMT. Source: fxstreet.com (Read Full Article)

Gold (XAU/USD) continues its record-breaking rally on Monday, extending gains for the sixth straight week as dovish Federal Reserve (Fed) expectations and robust safe-haven flows keep demand elevated. Source: fxstreet.com (Read Full Article)

The general line of thinking in markets this year has been that with Trump’s erratic policies and tariffs, it is all serving to bite at the US economy and the dollar. I admit, even I have been sold on the narrative that a weaker dollar has been in part driven by a shake up in confidence and credibility to the currency in the past few months.But besides the evidence we can see in FX flows, there’s another story in the background that is worth taking notice of.The latest Treasury International Capital (TIC) data for July actually showed that foreign demand for US-denominated assets remain strong. That despite alleged concerns about tariffs and the administration’s policy incoherence in handling many things, including the whole Fed ordeal.Now, the monthly data hasn’t quite yet captured the dovish pivot by the Fed itself but after the rate cut decision last week, it’s not to say that the Fed has leaned overly dovish in any case.So, let’s take a look at what some of the TIC data is saying (full data here).For one, foreign investors ended up with net purchases of long-term US securities worth $78.8 billion. The year-to-date figure shows net purchases worth $865.1 billion. For some context, the 2024 figure showed net purchases worth $1,180.4 billion. So, it’s not to say that there has been a material slowing down in investor appetite for US assets.The large chunk of those buying for July were in Treasury bonds/notes and corporate bonds/notes, amounting to $85.4 billion. That is partially offset by equity outflows on the month, which totaled to $16.2 billion. Now, are investors moving away from US stocks? Not quite.The net outflow in July comes after record inflows during May and June, which amounted to $115.8 billion and $163.1 billion respectively. And we all know, one month doesn’t make a trend.Looking into more details, total foreign holdings of Treasuries also moved up to hit a record $9.2 trillion. And of note, EU holdings of US-denominated assets also hit a record of $8.9 trillion in July. (h/t @ Credit Argicole)As such, that continues to underscore the strong appetite for US assets even during these supposed testing times for the dollar and the US economy.So, what does this all tell us?The dollar may be softer this year amid poor market sentiment and a confidence struggle in general. But if and when these headwinds come to pass, the underlying flows suggest that any potential rebound in the dollar is one that is going to carry a large weight supported by the still strong investor appetite for US assets.And if anything else, this does shoot down the thinking that foreign investors are moving away from the dollar and the US. In fact, it’s far from the reality as seen above. This article was written by Justin Low at investinglive.com. Source: investinglive.com (Read Full Article)

The Pound Sterling (GBP) bounces off a two-week low of 1.3453 on Monday, yet bulls are not out of the woods, after the pair hit a two-month peak of 1.3726 last week before plunging following the Federal Reserve’s decision to reduce interest rates. GBP/USD trades at 1.3496, up 0.27%. Source: fxstreet.com (Read Full Article)

Prior -33This isn’t a market-moving report but it’s an improvement. Selling prices eased from +9 in August to +4 in September. This article was written by Giuseppe Dellamotta at investinglive.com. Source: investinglive.com (Read Full Article)

UK inflation has proved more stubborn than expectedDomestic inflation falling at quite a slow paceUnderlying inflation not back in line yetBudget tax changes had direct impact on inflationNot seeing a revival in labour force participationLess competitive labour market than in the pastInactivity, Brexit and immigration changes could allow for larger markups on wage which might support inflationI am more comfortable now on balance of inflation risks than 6-12 months agoWe don’t want to constrain banks’ ability to use liquidityWe are moving toward a more repo-led systemHeadline and core inflation rates have been climbing steadily for a year and the UK services inflation rate has been stuck around 5%. But he’s now “more comfortable on balance of inflation risks”. Go figure…UK inflation has been much above the target since 2021 but the BoE continues to maintain a dovish reaction function, which is counterproductive in the face of rising inflation expectations. This article was written by Giuseppe Dellamotta at investinglive.com. Source: investinglive.com (Read Full Article)