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Morning Update

Word of the week Wednesday, strongest reading in a year for this morning's Nationwide House Price Index data, highest level of UK insolvencies in three decades, rising European gas benchmark, and today's data.

Word of the Week Wednesday

Dead cat bounce: A small, short-lived rise in the price of a falling security, currency or commodity. Even a falling dead cat will bounce when it hits the ground.

Nationwide House Price Index

This morning’s Nationwide House Price Index indicated that prices rose 0.7% on a month-on-month basis, beating expectations of a 0.1% print. This makes the average home worth £257,656, some 0.2% lower than in January 2023, marking the strongest reading in a year.

The article published by Nationwide indicated that there were “signs of easing in affordability pressures” with mortgage rates continuing to trend down. Nevertheless, the publication cited how the recent inflation print which came out stronger-than-expected “cautions that the interest rate outlook remains highly uncertain”.

This morning’s article also cited how the raising a deposit remains a challenging barrier to entry. Here, the article suggested that “raising a deposit also remains a major challenge for those wanting to buy, with a 20% deposit on a typical first-time buyer home equating to c.105%


of average annual gross income”. While this is down from the all-time high of 116% in 2022, it remains pretty well in line with levels seen before the GFC.

Finally, the article highlighted how there were regional disparities in relation to affordability with some of the greatest pressures being felt in London, the south of England and East Anglia.

The stronger print comes as the average 2-year fixed mortgage rate has fallen from 7% last summer to 5.18%, according to Moneyfacts. All eyes are now on the BoE interest rate decision tomorrow, where markets will be looking to gain further insight into the central bank’s future monetary pathway.

UK Insolvencies at Highest Level in 30 Years

According to England and Wales’s Insolvency Service, the number of UK companies going insolvent is at its highest level in three decades. The data released yesterday indicates that as many as one in 186 active firms entered into insolvent liquidation over the course 2023. The article highlighted how this was an increase of 14% from those entering liquidation in 2022.

This comes as companies have grappled with higher borrowing costs, waning consumer activity and levels of inflation not seen for decades. Moreover, given how company insolvency numbers were comparatively low over the coronavirus period, it’s likely that many companies kept afloat merely though government support measures, have since failed when such support was withdrawn.

When looking at industries which suffered the highest level of insolvencies last year, construction, Wholesale and retail trade and accommodation and food service activities recorded the highest.

Gas Prices Rise on Supply Side Fears

On the continent, TTF gas futures (the European gas benchmark) rose as much as 3% during yesterday’s session as markets factored in supply side fears. With some 9% of the world’s natural gas ordinarily transiting through the Red Sea, recent fragility in the region has resulted in LNG tankers from Quatar sailing via the Cape of Good Hope instead.

As we looked at earlier this month, natural gas prices recently fell to a six-month low, with EU storage levels exceeding 70%.  Storm Isha also increased wind power generation, helping to ease gas prices.

Today in Focus

Today’s main event is at 19:30 this evening, with the Federal Reserve’s policy meeting and subsequent press conference. While the market is expecting a further hold from the central bank, attention will turn to gaining any guidance over the extent to which the Fed will cut rates this year.

There continues to be a gulf between implied market expectations of the Fed’s monetary loosening over 2024, for example, while the FOMC have indicated 75bps worth of cuts this year, implied market expectations are signalling over double this level at around 150bps.

Elsewhere, at 13:15, all eyes will be on the US ADP employment print ahead of the string of US labour market data on Friday.

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