BoE fails to lift spirits after disappointing Fed

Talk of negative rates at the BoE has done little to boost sentiment after the Fed failed to allude to further easing. Meanwhile, Brexit talks become more complicated as Joe Biden warned that he would block a trade deal if the Northern Irish peace deal is not respected. 

• Fed fails to inspire confidence despite promising lower for longer rates 
• UK alludes to potential negative rates, but fails to lift sentiment 
• Biden puts pressure on Brexit talks  

US and European markets are moving lower, as the recent tech-led decline continues in the wake of a disappointing FOMC meeting. Unfortunately the market weakness brought about from a somewhat hesitant Fed has been sustained despite the BoE managing to deliver where the Fed had failed. What is clear is that we are unlikely to see any form of monetary contraction in the near future, with the Fed laying out plans to keep rock-bottom rates until 2023. However, with bloated market valuations coming off the back of a historic drive for higher debt and easy money, that incessant desire for more stimulus is now having a toll on market sentiment. In any case, while markets are turning lower once again, this crisis has shown us that any meaningful decline in stocks will inevitably result in another bout of stimulus to steady the ship.  

The pound has enjoyed a late resurgence today, after the EU’s von der Leyen stated that she is ‘convinced’ that a trade deal between the EU and UK is still a possibility. Unfortunately, the past 24 hours just saw a third party throw their hat into the ring, with Joe Biden stating that he would only negotiate a trade deal if the UK strikes a deal that fully respects the Good Friday Agreement. With Trump seemingly keen to strike a deal with the UK, there is a possibility that we could soon see the value of the pound intertwined with UK election expectations as a proxy for the future UK-US trade relationship.