Davenham Asset Finance
Call Us: 0161 832 8484
email: enquiries@davenham.co.uk
  • Home
  • What is Asset Finance?
  • Meet Our Team
  • Asset Finance
    • Asset Refinance
    • Vehicle Finance & Refinance
    • Construction Finance / Plant & Machinery Finance
    • Machinery & Equipment Finance
    • Agricultural Finance
    • Printing Equipment Finance
    • Finance Lease
    • Machinery Tool Finance
    • Recycling & Renewables Finance & Lending
    • Hire Purchase/Lease Purchase
    • Short Term Finance
    • Turnaround Finance
  • Brokers
  • Case Studies
  • News
  • Blog
  • Careers
  • Contact Us
ECONOMIC UPDATE: 28 JULY 2015

DAVENHAMS WEEKLY ECONOMIC UPDATE - WITH A BIT OF U.S. EDUCATION

Welcome  back  to our  fifth  weekly  update  which  is  looking  pretty  thin  –  a  reflection  of  the summer holidays perhaps? 

The main focus for the coming week will be on the U.S. and the FOMC (Federal Open Market Committee) meeting on Wednesday 29 July, this being the last meeting before the meeting on the 17 September. Commentators  are seeing the 17 September meeting as the date an announcement will be made regarding an increase in interest rates.  We can only surmise if the  FOMC  has  already  made  a  decision  on  the  future of  interest  rates  however  it  will  be keen to ensure  any statements it makes prepare the markets for any movements – so any statements will be read with interest (excuse the pun).  This seems a bit odd when everybody has been talking about this for a few months now – I suppose all we can say is that’s its coming from a credible source ie the people who actually make the decision.  

In addition the U.S. GDP figures are due out a day after the guidance is released, which are bound to have an impact so I think  it’s fair to say the FOMC will have been given a “heads up” before they issue their statement.  

So what is the FOMC?   

Well it’s a committee of the Federal Reserve Board that is responsible for conducting “open market operations”(OMC).  The  FOMC  is  specifically  charged with  guiding  open  market  operations,  the buying and selling of U.S. Treasury securities to control the money supply with the multi-faceted goalof  limiting  business-cycle  instability  and  promoting  economic  growth.  The  FOMC  typically  meets every six weeks in Washington, D.C., more often it needed, to evaluate the course of monetary policy - hope that helps.


 As  mentioned  above  the  US  is  also  issuing  its  Q2  GDP  figures  which  will  hopefully  confirm the  economy  is  going  in  the  right  direction  and  has  recovered  from  its  “could  do  better” performance for the previous quarter.  So, a busy week ahead for the US which will also see circa 150 key companies Reporting thus giving a further gauge as to how the economy is performing. 

However,  continued  bad  news  from  China  regarding  manufacturing  output  connected  to equity  stocks  still  in  free-fall  could see  caution from  both  the  Fed  and  the  BOE  when considering interest rate movements.

So  what  has  happened  to  Greece?    It  appears  to  have  gone  quiet  albeit  you  only  have  to scan the BBC News website to find the odd story along with articles still being reflected in a number  of  the  broadsheets.  Focus  appears  to  be  on  the  preparation of the  Bailout Agreement with all interested parties working together to get this finalised - a good little job for the city lawyers and investment banks! 

In the UK we are also expecting the GDP figures to be reported and like the US, it is hoped they  show  an  improvement  from  the  disappointing  figures  for  Q1  with  a  well  performing service sector.

And  that’s  about  it  other  than  a  few  other  announcements  detailed  below  –  no  news  on Greece Mk II at the moment.

Weekly Indicators to be published this week include: 
Tuesday – UK GDP figure Q2 
The first view on Q2’s GDP’s figures will be issued on Tuesday.  As noted above the service sector  is  expected  to  contribute  to  an  increase  in quarterly  figures  compared  with  Q1, although  the  construction  and  manufacturing  sectors  are  expected  to  show  a  contraction. This  seems  strange,  as  it  was  expected  that  the  construction  sector  would  show  further expansion.

The   weakness   of   the   manufacturing   sector   has   been   put   down   to   a strengthening of sterling hampering export. The biggest impact, on the GDP figure, likely to come   from   the   gas   and   oil   industry   reflecting   a   circa   13%   increase   in   production. Commentators are already talking about a two speed economy, which will be pushed along by the service industry with manufacturing lagging behind as sterling strengthens. 

Wednesday – Household Lending (June) 
The  market  is  expected  to  show  further  signs  of  improvement  despite  a  backward  step  in May,  an  expectation  based  upon  rising  household  incomes  and  that  important  “feel  good feeling” as consumer confidence continues to grow, something we think is great news here at Davenham.   

Friday – GfK Consumer Confidence (Jul) 
Following  on  from  Wednesday’s  expected  release  concerning  Household  Lending,  the Consumer Confidence index will be issued two days later (Friday) and is expected, whilst still positive, to be slightly less than the 15 year high seen in June.  

Joe Staton, Head of Market Dynamics at GFK reported at that time:  “We’re seeing a dramatic uptick in confidence this month, a real post-election bounce that’s put a spring in the step of consumers across the UK. June’s six-point jump takes the Overall Index Score  back  to  levels  not  seen  since  the  late Nineties  or  early  days  of  the  Noughties. Across all key measures we’re reporting higher levels of financial optimism for both our own personal situation and for the general economy as a whole for the coming 12 months. This renewed  optimism  could  also  translate  into  a  busy  time  for  retailers.  The  number  of shoppers  agreeing  that  “now  is  a  good  time  for  people  to  make  major  purchases  such  as furniture  or  electrical  goods”  has  powered  ahead  by  a  buoyant  14  points  this  month compared to negative sentiment for the same period last year." 

Well  let’s  see  what  July  has  to  say  and  whether  talk  of  interest  rate  rises  and  further squeezes  forecast  by  the Government  have  impacted  on  the  way  people  feel  and  spend  – watch this space.

 Sometime during the week as mentioned above, the view is  that  the housing market is beginning to  plateau  although this will still have regional variations.  Recent RICS data has shown market prices stabilising, and  commentators  remain  mixed  over  their  views  as  to  what  the  report  is  going  to  say, partly  due  to  the  impact  of  adopting  a  different  calculation  and  partly  the  number  of differing contributing factors. Overall it’s going to be between 0.1% and 0.2%.   

Treasury Viewpoint Exchange rate movements can be summarised as follows:
Picture
Current rates are circa 1.41 (GBP/EUR) forecast to increase slightly over the next 12 months to circa 1.48. GBP/USD currently at circa 1.57 forecast to remain relatively consistent over the next 12 months.


With regard to interest rates the current forward curve is as follows showing potential SWAP rates:
Picture
We hope that you have found this update useful, and it has given further insight on the economy, however if you would like to see something specific included on an upcoming report or need asset finance or asset refinance support, please contact one of our team.

In the meantime, have a great week and stay tuned for next weeks update.

Paul Burke
Managing Director, Davenham Asset Finance
Tweets by @DavenhamAssetFi
​Davenham Asset Finance is not authorised by the FCA to conduct regulated business and thus can only provide asset finance and asset refinance solutions to non-regulated businesses.

Subscribe to our Mailing List

To receive the latest business funding news via our newsletter, please Opt In to our newsletters below. We will never share your data and you can find more on how we comply with Data Protection in our Privacy Policy.
* indicates required
Assets Financed
• Construction Plant & Machinery
• Engineering Equipment
• Printing Machinery
• Manufacturing Machinery
• Agricultural Machinery
• Private Vehicles 
• Haulage Vehicles
• Bus & Coaches
Types of Finance Offered
• Finance Lease
• Hire Purchase/Lease Purchase
• Refinance of existing assets
• Turnaround finance
•
 Short Term Funding
Part of the Davenham Group  including  www.davenhamtradefinance.co.uk
Registered Office 55 King Street, Manchester M2 4LQ.      Company Number 08356079

Picture
Picture
Picture
Picture
Picture
Website designed by The VIVIDesigner
Careers  | Sitemap | Cookies Policy | Privacy Policy | Terms & Conditions
✕