Daily Futures Commentary August 5, 2009

Wednesday, August 5, 2009

Better than expected overnight reports out of the United Kingdom should solidify speculation that the Bank of England is prepared to temporarily end its asset buyback program. Overnight it was reported that U.K. industrial production was up as well as U.K. house prices. Economists had expected both reports to be flat to lower. These reports serve as additional signs that the country is emerging from its recession.

The Bank of England’s next meeting is August 6th. At this meeting BoE officials are expected to keep interest rates unchanged at or near 0% while announcing that its program to purchase government bonds served its purpose and should be temporarily shutdown.

According to Bloomberg, eight of 12 primary dealers surveyed are calling for the end of the asset buyback program that ended up pumping approximately $212 billion into the U.K. economy over the past five months. Although the Bank of England used 125 billion Pounds out of an authorized 150 billion, the program served its purpose by helping to contain borrowing costs and stimulate the economy.

At its next meeting on August 6th, the BoE is expected to announce …
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