News

The Bank of England is expected to slow the pace of its quantitative tightening programme at Thursday’s meeting, while leaving interest rates unchanged at 4%.

• Policymakers are likely to vote 7–2 in favour of holding steady, after last month’s narrow 5–4 decision to cut rates.

Markets anticipate the BoE will reduce the annual pace of gilt sales from £100 billion to around £67.5 billion, according to a Reuters poll, with some analysts predicting an even deeper slowdown to £60 billion or a shift toward shorter-dated bonds.

• While the BoE insists QT has only marginally lifted borrowing costs, critics argue it has exacerbated volatility and contributed to the sharp rise in long-dated gilt yields this month.

The UK faces the highest inflation and government borrowing costs in the G7, with price growth holding at 3.8% in August — nearly double the BoE’s 2% target. The central bank expects inflation to peak at 4% before easing gradually back to target by mid-2027. Governor Andrew Bailey has warned there is “considerably more doubt” about how quickly rates can be cut further.

Futures markets now price only a 30% chance of another cut this year, though economists in a Reuters poll still see scope for reductions in November or December and again in early 2026.

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Gilt yields may ease if QT slowdown is larger than expected, but inflation risks linger

• Sterling could firm if policymakers strike a hawkish tone despite holding rates steady

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The Bank of England announcement is due at 1100 GMT, 0700 US Eastern time.

This article was written by Eamonn Sheridan at investinglive.com.

China’s auto sector is in turmoil as years of state-driven overproduction have created a glut of vehicles, forcing steep discounts, gray-market sales, and unprofitable dealers. Analysts warn only a handful of automakers will survive long term, but Beijing has resisted allowing failures due to economic and political risks, leaving the world’s largest car market trapped in a cycle of oversupply.

Reuters carried an extended report on this. In summary:

China’s auto industry is grappling with severe overcapacity after years of government policies that pushed production targets over market demand. Carmakers and dealers now face a glut of vehicles that has triggered steep discounts, unusual sales tactics, and widespread losses across the supply chain.

Dealers slash prices to qualify for factory rebates, while unsold cars are registered and insured as “sold,” exported as zero-mileage “used” vehicles, or dumped onto gray-market platforms like Zcar. Some vehicles even end up abandoned in car graveyards or auctioned online at a fraction of their original price. Analysts say the system has become a vicious cycle of oversupply and destructive competition.

Local governments have exacerbated the problem by offering cheap land and subsidies to attract factories, creating excess capacity nationwide. While giants like BYD and Geely may weather the storm, most of China’s 129 EV and hybrid brands are unlikely to survive, with consultants predicting only 15 will be viable by 2030. Despite calls for consolidation, Beijing has been reluctant to let automakers fail, fearing mass layoffs and slower growth.

The crisis has wider implications: autos and related industries make up about a tenth of China’s GDP, and foreign automakers are rapidly losing market share. Meanwhile, Europe and the U.S. are wary of a flood of cheap Chinese cars disrupting their markets. With EV price wars now entering a third year, the industry faces a shakeout, but political incentives and economic risks may delay tough reforms.

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Australia has no local car manufacturers, so nothing to protect. Getting some of these into the coutnry would be an big impact on inflation (lower).

This article was written by Eamonn Sheridan at investinglive.com.

CNBC’s Jim Cramer suggested major market themes haven’t really changed in the wake of the Fed’s meeting.

New Zealand Q2 GDP

Gross Domestic Product -0.9% (QoQ) (Q2)

• expected -0.3%, prior 0.8%

Gross Domestic Product -0.6% (YoY) (Q2)

• expected 0.0%, prior -0.7%

NZD/USD has dropped a few tics on the data release. Big miss for this data. New Zealand in recession again.

New Zealand’s economy contracted in the second quarter

• heightened uncertainty around U.S. tariffs and ongoing weakness in the housing market cited

This article was written by Eamonn Sheridan at investinglive.com.

US SEC votes approve generic listing standards for new crypto ETFs

more to come

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Another tailwind for crypto.

Other news:

• Golden Trump statue with Bitcoin was installed outside Capitol before Fed rate decision

This article was written by Eamonn Sheridan at investinglive.com.

Three police officers have been fatally shot – Pennsylvania, USA

Two more officers are in critical condition.

more to come

This article was written by Eamonn Sheridan at investinglive.com.

Westpac says the Federal Reserve is edging toward a neutral stance as risks around inflation and the labour market become more balanced, though uncertainty remains elevated.

• At its September meeting, the Fed cut rates by 25 basis points to a midpoint of 4.125% and signalled that risk management was its priority.
• Updated forecasts point to firmer growth and a shallower rise in unemployment than previously expected, with GDP seen running near trend through 2028 and joblessness peaking at just 4.5% in late 2025.
• Inflation is projected to ease gradually, falling back toward the 2% target by 2027.

Westpac notes the Fed’s so-called “dot plot” reveals a wide dispersion of views, with some policymakers favouring more cuts this year while others see little need for further easing. By 2027, however, forecasts largely converge back to trend.

Even so, Westpac remains more cautious than the Fed’s median view. The bank believes U.S. growth and employment are likely to come in weaker than policymakers expect, while inflation may prove stickier. That combination, it argues, could force the Fed to keep policy modestly restrictive for longer, rather than shifting quickly toward an outright expansionary stance.

This article was written by Eamonn Sheridan at investinglive.com.

Deutsche Bank has lifted its 2026 gold forecast to an average of $4,000 an ounce, citing continued central bank buying, led by China, and the impact of U.S. Federal Reserve rate cuts.

• The new projection is up from the bank’s prior $3,700 call and reflects expectations that bullion’s premium to fair-value models will persist.
• Precious metals analyst Michael Hsueh said further upside is more likely than a correction, with central bank purchases potentially reaching 900 tons next year.
• Hsueh added that risks skew gold-bullish if the Fed’s independence is questioned, though Deutsche’s forecast does not formally include that scenario.
• The bank expects the Fed to keep rates unchanged in 2026 after three cuts this year, though Trump’s tighter immigration policy could restrict labour supply and strengthen the case for more easing.
• Deutsche Bank also raised its 2026 silver forecast to an average of $45 an ounce, up from $40, with the market set for a fifth straight year of physical deficits.

This article was written by Eamonn Sheridan at investinglive.com.

A 12-foot golden statue of President Trump clutching a Bitcoin was placed outside the U.S. Capitol on Tuesday, just ahead of the Federal Reserve’s policy decision. The temporary installation on 3rd Street, open from 9 a.m. to 4 p.m., was funded by a group of cryptocurrency investors.

Organizers said the artwork is meant to spark debate about digital currency, monetary policy, and Washington’s role in financial markets.

• “The installation is designed to ignite conversation about the future of government-issued currency and symbolizes the intersection of politics and financial innovation,” said Hichem Zaghdoudi, a spokesperson for the group.
• They added that with the Fed shaping policy, the statue should prompt reflection on cryptocurrency’s growing influence.

This article was written by Eamonn Sheridan at investinglive.com.