Daily Market Report - 30/05/2014

GBP:
New data suggests to some analysts that the Help to Buy is doing very little. 7,313 mortgages were completed in the first six months of the government’s mortgage guarantee scheme, equivalent to 1.3% of all mortgage completions. With that being said, 80% have gone to first-time buyers.

The stats also show that Help to Buy has been most popular with households earning between £30,000 and £40,000, and to buy properties worth £125,000 or less.

It is possible that the BoE might start watering down the scheme in its annual review in September despite providing a government guarantee of 15% of the property value, making it possible to get a mortgage with just a 5% deposit.

The data backs up the argument that the scheme is not fuelling the boom in top-end properties; but is helping people onto the bottom of the an increasingly steep property ladder.

USD:
American growth figures show GDP fell by an annualised rate of 1.0% in Q1 as companies cut back on investment and restocking their inventories. For the US it was the first quarterly decline since a 1.3% drop in the first three months of 2011.

This year's dip reflected slower stockpiling by businesses, a cutback in business investment and a wider trade deficit. Exports also slipped by 6%, making another dent in economic output. Corporate profits sank by 9.8% in the first quarter, the biggest decline in almost six years.

Economists are looking for a strong rebound in the April-June quarter as the country shakes off the effects of a severe winter.

Although the majority of economists expected the first quarter to contract, the data suggests that American firms were hit even harder by the awful wintery weather than first thought, however are expecting a bounce back for the second quarter, especially as consumer spending was good even with the economy contracting at the time.

On a positive note, the number of people filing new jobless claims fell to just 300,000 last week, down from 327,000. And the continued claims figure (those who had been claiming for more than a week) slid to 2.631m, the lowest level since November 2007.

Today:
The main focus today is on the USA and employment data. As always on the last Friday of every month USA Nonfarm payrolls are released, this month they are expected to fall from 288k to 215k. Coupled with this the unemployment rate is released which is expected to stay the same at 6.3%.

Announcements:

09:30 - UK - Total Trade Balance, last month’s figures show a £1.284B deficit
13:30 - USD - Nonfarm Payrolls (May) expected to fall 215k
13:30 - USD - Unemployment Rate (May) expected to stay the same at 6.3%

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