By Augustin Eden, Analyst

Will they? Won’t they? Might they? Are we all going to go bust?!  All questions asked of the Bank of England of late.

The answer – to the first two questions anyway – is not before the Americans. It’s been fun to get the odd bit of interest rate commentary from the Bank of England recently in what seems to be a ‘…well, they’re talking about it so we’d better weigh in with some chat of our own, remind people we exist…’ situation. David Miles thought he’d better come out and say something about Super Thursday a full week after the event, presumably to keep up with the joneses even though there was nothing new to report.

The fact is, though, that markets aren’t in the least bit bothered about when Mark Carney’s gang will tighten hitherto extremely accommodative fiscal policy, since they know a) it won’t happen until after the bigger boys at the US Federal reserve move first and b) The governor of the Bank of England actually admitted earlier in 2015 that the only reason he was putting out anything about a UK rate rise was to give the markets and complacent homeowners a kick up the proverbial behind.

Of course, now that there’s talk of global currency wars, bullish as they are for USD strength, it doesn’t look like a US rate hike will happen in 2015 (bold words, I know). We’re all buying less from China (The cheap bike lights I’m about to order are unlikely to help) while china itself is buying less from the outside world, which means the economy is looking pretty sluggish;  China-inspired competitive devaluation could have a big impact on international trade and ergo global growth if it does indeed take hold.

Such a state of affairs in the worlds #2 economy (by size, this isn’t Top of The Pops) has been suspected by ‘cynics’ for a long time, yet was all but confirmed when the PBoC finally decided its daily currency fix could do with being taken down a peg or two, allowing the Yuan to do what the (cynical?) markets were all betting on: bow down under selling pressure.

The problem now is that it’s not just the cynics who don’t believe China’s macro data. “So, the economy’s been growing at or near 7% recently yeah? Oh really?! Of course, that explains why China’s economy is booming this week. So much so that it needs further stimulus. I getcha.” The Bank of England gets ya too.

Naturally, I can’t speak for the BoE as to whether it believes china’s data, but the thing is there are some very large UK listed companies that depend on China – our very own UK 100 miners for instance – who’ve arguably been scraping by on low interest rates and cheap energy (namely oil…) of late, buoyed only by optimistic hopes of Chinese growth. It’s unlikely that the BoE will want to start hammering nails into the coffins of these players by raising borrowing costs at or near a time like this. Best wait for the Fed to move first? I think so.

In the meantime we’re in for some exciting trading conditions as a 3^rd Greek bailout begins to be exposed for the can-kicking deal it is (for Greece that is – Germany may actually make a profit out of all this through savings from falling Bund yields as fixed income investors abandon risk and race into the powerhouse of Europe). Long bets on equities may be few and far between, but since it’s a generally accepted rule that markets fall faster than they rise, traders will likely be ironing their shorts as the storm clouds gather. There’s always a profit to be had.