In the UK, there are further signs that the housing market is becoming heated. Nationwide has announced that it is raising the age limit for people paying off  mortgages by ten years to 85. This means that borrowers could continue to pay off mortgages well into their retirement as long as it is shown the payments are affordable. Furthermore, Barclays has announced that it will begin offering 100% mortgages once again (although there are some strings attached). However, the government and the Bank of England are much more aware and willing to take action to ensure that the market does not become out of hand. The recent increase in stamp duty for second homes, reduction in mortgage interest relief and high LTV lending limits for banks are all designed to reduce the flow of capital into property.

Equity markets continued their path downwards, and gilts rallied over the course of the week. However, there was a late equity market rally on Friday following the announcement that the US economy added 160,000 jobs in April. This was under economists’ expectations and coincided with a downward revision in both March and February’s reported figures. The counterintuitive reaction to slowing jobs data may be its impact on the upcoming Federal Reserve interest rate decision in June. June was highlighted by many as the month the second rate rise was most likely to occur. Weaker job data may give policy makers reason to push this further into the future. Encouragingly, US earnings growth remained strong, with average hourly earnings rising by 2.5% and the jobless rate staying constant at 5%.

The owner of the world’s largest shipping company has stated that negative interest rates are delaying a consolidation in the industry which is seriously needed. Poor shipping companies can stay solvent on cheap credit. This is an example of the potential long-term negative effects of super-loose monetary policy. Cheap debt does not encourage “creative destruction” within industries and could be suppressing growth in productivity which has been running at well below the long-term average globally, since the financial crisis.

The Bank of England interest rate decision is announced on Thursday. On Friday, there is a raft of data from the US including April PPI inflation figures.

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