Let me take you by the hand and lead you through the streets of London I’ll show you something to make you change your mind

Jeremy Powell, in his State of the Nation address, did acknowledge that he expects rates to be cut at some point this year. His speech did nothing to change the market’s current view of 3 rate cuts during the year, with the first most likely in June. We have noted that there may be a few signs the US economy is feeling the delayed effects of this tighter-for-longer policy. Some economists interpreted the latest trade US data as an indication of a weaker picture for the first quarter than they had assumed. Factory orders fell in January, in line with the downbeat durable goods orders data. As we wait for the latest jobs report released at lunchtime, yesterday’s jobless claims report came largely unchanged from the previous month. There are some possible indications that layoffs are increasing and that the labour market could weaken further in the months to come. Later today, investors will eagerly await the nonfarm payrolls report. Forecasts are for around 200,000 jobs to be created in February, and the US unemployment level remains at 3.7%. As Powell acknowledged the delay in starting to raise interest rates as inflation took hold, he discounted the idea that the Fed would make the same mistake on the way down. Adding on Thursday that the Fed are not far from starting to ease policy.

I’m not sure there is much to add to the budget, but Mr Hunt told us all we needed to know ahead of the day, and there were literally no surprises. The introduction of the 5000 pound UK investment ISA did little to raise a deeply unloved index. As Mr Authers points out this morning, part of the problem for UK stocks is that UK pension funds don’t really own them anymore or want to. When I started in the City many moons ago, the majority of pension fund holdings were in UK equities; now, they barely own any. The traditional pension fund model of 80% equities and 20% bonds is long gone. The average UK pension fund now has just a mid-single-digit percentage invested in UK equities, almost 60% in fixed-income, and the balance in overseas, largely US, equities. If he could have found a way to incentivise UK pension funds to buy UK equities that might have moved the needle. As it is UK equities remain cheap and unloved.

Stocks in America regained their poise in the past 48 hours, with all major indexes rising, helped by Powell’s additional comments on Thursday regarding monetary policy. Stocks in Europe open on the front foot today.