UK Gilt Yields Fall as BOE Raises Rates -2-

1136 GMT - The U.S. Inflation Reduction Act is a boon to renewable-energy investment that poses "a broad set of opportunities" in the U.S. for oil giant Shell, the London-based company's Chief Executive Officer Wael Sawan tells reporters on a media call Thursday. "We see now opportunities that we were on the fence on, that are suddenly interesting because of the tax credits," Sawan says, citing areas including blue-hydrogen production and carbon-capture technologies. His comments come in his first quarter as CEO, and as Shell reports record full-year earnings for 2022, a blowout year for big oil-and-gas companies. ([e-mail]; @jennystrasburg)

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Strong Company Fundamentals Support Sterling IG Credit

1156 GMT - Sterling-denominated investment grade bonds are an attractive investment due to strong company fundamentals and high levels of yields, says IBOSS senior investment analyst David Winckler in a note. "We like the investment grade U.K. credit market because company fundamentals remain robust, and yields are attractive," he says. The sterling bank credit are also suitable investments as banks in the U.K. are far better capitalized than during the Great Financial Crisis, Winckler says. ([e-mail])

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JTC Seen With Strong Momentum, M&A Potential

1203 GMT - JTC's update points to 2022 Ebitda at the top end of the consensus range, with continued strong organic growth momentum in the business, RBC Capital Markets analyst Andrew Brooke says in a research note. Brooke says the fund administration industry has structural growth potential and consolidation will be a major theme that JTC will play its part in. "In our view, JTC is well positioned given its unique ownership model and jurisdictional reach," he says. RBC has a sector perform rating on the stock with a 820 pence price target. Shares trade up 4.6% at 755.00 pence. ([e-mail])

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BOE's Monetary Report Is 'Far Cry' from Earlier Dire Predictions

1217 GMT - The Bank of England's monetary policy report is a "far cry from the rather dire predictions of only a few weeks ago," revealing that the BOE now expects a shorter and shallower recession, Jeremy Batstone-Carr, European strategist at Raymond James Investment Services says in a note. The BOE raised the bank rate by 50 basis points to 4%, as most in the market had expected, but the Monetary Policy Committee was again split with two members voting for unchanged rates and one for a 75bp increase. The markets are eager for the BOE to signal it is close to, or at, its peak rate, the strategist says. ([e-mail])

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Sterling Trims Losses Only Briefly After BOE Lifts Rates 50Bp

1229 GMT - Sterling trims its losses but only briefly after the Bank of England raised interest rates by 50 basis points to 4.0% although two out of nine members preferred to keep rates unchanged. Some analysts expected a smaller 25bp rate rise. The BOE said inflation is likely to fall sharply over the rest of the year but the outlook is uncertain and it will lift rates further if inflationary pressures persist. GBP/USD initially rises to 1.2386 after the decision from 1.2332 beforehand but has since fallen back down to 1.2284. EUR/GBP briefly falls to 0.8888 from 0.8919 before rising to a fresh four-month high of 0.8950, according to FactSet. ([e-mail])

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BOE Could Be Nearing End of Rate-Rise Cycle

1238 GMT - The Bank of England is likely to be nearing the end of its interest-rate rising cycle after lifting rates by 50 basis points to 4.0% on Thursday, Killik & Co partner Rachel Winter says. While the market had priced in Thursday's rate decision, many had hoped the BOE would hold off on a further rise given the latest inflation reading registered a slight fall in prices, she says in a note. "The good news is that we do appear to be getting close to peak interest rates, with the market now predicting that our base rate will reach 4.5% this summer before declining." ([e-mail])

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BOE Could Start Cutting Rates by Year-End

1249 GMT - The Bank of England looks set to raise interest rates only once more, with the possibly of rate cuts before year-end, UBS Global Wealth Management says. It seems the appetite for further outsized rate rises is fading after the BOE lifted rates by 50 basis points to 4.0% on Thursday, although another increase is still likely given the BOE's outlook for growth and inflation, UBS economist Dean Turner says in a note. "We look for one further increase of 25 basis points in March which should mark the top of the cycle," he says. "Furthermore, we believe the door remains open for rate cuts before the year is out." ([e-mail])

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BOE's Lower Inflation Forecasts Point to End of Interest-Rate Increases

1254 GMT - The new inflation forecasts from the Bank of England suggest policy makers won't need to raise interest rate further over the coming months in order to bring inflation back to the 2% target, Pantheon Macroeconomics chief U.K. economist Samuel Tombs says in a note. The minutes of the meeting didn't include any clear guidance of further interest rate increases, he adds. Still, one last 25 basis-point rate increase in March still can't be ruled out, Tombs says. "But if, as we expect, signs of slowing price rises and accumulating labour market slack continue to emerge in line with its expectations, then the Monetary Policy Committee looks set to keep bank rate at 4% in March, and throughout the rest of this year." ([e-mail])

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BOE Statement Indicates Caution, Points to Data Dependence

1258 GMT - The Bank of England's statement accompanying a 50 basis-point rate rise indicates a central bank that is cautious and looking for more data to direct them on future policy action, Fredrik Repton, portfolio manager with the global fixed income and currency management teams at Neuberger Berman, says in a note. The labor market is stronger than they had expected and they have revised up forecasts for the economy as a whole, but the BOE now expects inflation to drop markedly due the base effects in energy prices, he says. "Thus, it has removed the reference to forceful with regards to increasing interest rates and this is perhaps the biggest takeaway before the press conference as market participants reads this as dovish." ([e-mail])

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BOE Expected to Keep Raising Interest Rates Amid Tight Labor Market

1259 GMT - The Bank of England is expected to continue to increase interest rates to at least 4.50% from the current 4.00%, J.P. Morgan Asset Management chief market strategist for EMEA Karen Ward says in a note. "Even though headline inflation is likely to fall in the coming months, on the back of stable energy prices, we do not expect core inflation to weaken materially as wages continue to put upward pressure on costs and final prices," she says. The U.K. has a problem of labor supply as half a million people left the workforce during the Covid-19 pandemic and may not return in the short-term, she says. "At times like these, the bank has to make the 'unpopular' choice," Ward says. ([e-mail])

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European Stocks Stay Higher After BOE Rate Rise

1302 GMT - European stocks broadly maintain gains after the Bank of England raised U.K. interest rates, though sterling compounded losses. The Stoxx Europe 600 gains 0.4%, the FTSE 100 rises 0.5%, the CAC 40 edges 0.1% higher and the DAX jumps 1.1%. Brent crude drops 0.7% to $82.23 a barrel. IG futures data show the Dow opening at 33933, versus Wednesday's close of 34092. The pound drops against the euro and the dollar as the BOE increased rates by 0.5% percentage points to 4%, but implied that they might have peaked. "We retain a cautious view on U.K. and European stocks in the face of downside risks to GDP and corporate earnings growth relative to consensus expectations," HSBC Global Asset Management strategist Hussain Mehdi writes. ([e-mail])

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Sterling Could Fall, Gilt Yields Rise After Rate Decision

1309 GMT - Sterling may fall in the near-term and yields of U.K. government bonds, or gilts, may rise slightly after the Bank of England's policy decision Thursday, Aviva Investors says. With the BOE anticipating a shorter and shallower recession and saying inflation risks are "skewed significantly to the upside," gilt yields should rise but not materially given expectations for inflation to ease, Aviva head of rates Ed Hutchings says in a note. "Sterling may well begin to struggle in the near-term, and with the sizeable amount of gilt issuance to come, plus on-going quantitative tightening, 2023 could also be somewhat more challenging for the gilt market." The BOE voted 7-2 to lift rates by 50 basis points on Thursday. ([e-mail])

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BOE's Tightening Cycle Looks Close to Its End

1309 GMT - The Bank of England's messaging suggests the bank is laying the groundwork for the end of the current cycle of interest-rate increases, ING developed markets economist James Smith and senior rates strategist Antoine Bouvet say in a note. Lower inflation forecasts, muted language about future interest-rate hikes and warnings about economic growth suggest the peak level of the deposit rate is close, they say. Still, Thursday's interest rate increase isn't likely to be the last amid still-high wage growth, ING says. "We think the BOE will be less rapid to turn to rate cuts than the Federal Reserve, given core inflation is likely to prove stickier," they say. "That suggests policy easing is unlikely for at least a year." ([e-mail])

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BOE Outlook Uncertain, Premature to Expect Rate Rises to End

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02-02-23 0857ET