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5 "Tells" that the Stock Markets Are About to Reverse

Fitch UK Debt, Deficit and Ratings Warning Publicity Stunt

Interest-Rates / UK Debt Jun 08, 2010 - 06:38 AM GMT

By: Nadeem_Walayat

Interest-Rates

“The scale of the United Kingdom’s fiscal challenge is formidable and warrants a strong medium-term consolidation strategy, including a faster pace of deficit reduction than set out in the April 2010 budget,” Fitch said.


The Gilt market reacted by pushing yields LOWER across the yield curve with 2 year at 0.78%, 10 year at 3.47% in answer to how the markets rate Fitch and the other ratings agencies that remain as much as 6 months behind the curve. For instance Fitch's report is based on the Labour Government pre-election budget, as if in total denial of the fact that the country has a NEW Con-Lib government.

My only conclusion is that the discredited Fitch ratings agency report is purely a publicity stunt to try and get some free press attention and business amidst the on going UK speculation to the degree of spending cuts and tax rises to be announced in the June 22nd Emergency Budget.

The fact of the matter is that the UK deficit is heading sharply lower having already been cut from £178 billion forecast to £156 billion BEFORE cuts have been implemented, it is not inconceivable that the budget deficit could easily fall below £100 bilion within a year, an analysis of which is pending actual cuts and tax rises to come on June 22nd.

However sterling traders took their cue to send sterling back to £/$1.44 as the British Pound continues to target a sub £/$1.40 2010 low.

Source: http://www.marketoracle.co.uk/Article20134.html

By Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-10 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 20 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis specialises on UK inflation, economy, interest rates and the housing market and he is the author of the NEW Inflation Mega-Trend ebook that can be downloaded for Free. Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 500 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

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