The guys in Ireland could be forgiven for casting an envious glance across the sea at UK interest rates falling yet again; how long before they reach parity with European rates? But to be fair, you’re not missing out on anything. It’s a bit like being p*ssed off at not getting that party invite, only to hear later on that there was no alcohol and all the guests got stung for charity raffle tickets.

OK, some of the variable rate mortgages might have edged down, but check out the change in some of yesterday’s mortgage rates:
Alliance & Leicester 2 year fixed - up from 5.94% to 6.24%
Nationwide 5 year fixed- up from 5.83% to 6.15%
Abbey 2 year fixed- up from 5.79% to 5.99%
Woolwich 10 year fixed- up from 5.29% to 5.59%

there’s more, but I reckon you’ve got the picture.

So, what’s it all about Alfie? Well, to a large extent the official interest rate is seedless, impotent, no use to man nor beast. It’s part of a big PR game and something for the media to write about. Most loans and mortgages are priced off moneymarket rates determined by the commercial banks (LIBOR to use its proper name). The LIBOR rate is governed by how willing the banks are to lend money; if they’re willing to lend then the rate will fall, if they’re not willing to lend then the rate has to rise until it appears rude not to part with some dosh.

At the moment, despite the magic mushroom euphoria in equity markets, banks are keener on holding onto their money than risking it with a rival bank. This is pushing up the money rates that we really borrow at, and that includes companies as well.
So, the message is, “you ain’t missing anything.”

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Hey, guess what? I did run my EURUSD bet overnight and, yes, I did get stopped out. But overall it was a reasonable result. In late afternoon trading my decision looked a good one. I bought back a further £1 at $1.5732 and trailed the stop on my final £2 to $1.5784. So, my overall profit on the trade finally rolled in at £440, better than a night in the cells with Pete Doherty.

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Rolling, rolling, rolling. The bad news keeps on rolling, sub-prime…….
Earlier today Japan’s Mizuho Financial fell on its sword, declaring a $5.5 billion sub-prime loss and cutting its earnings estimate. The University of Michigan Consumer Confidence survey came in well below expectations and was the weakest number since 1982. By contrast, inflation expectations from the same survey rose to 4.8%, the highest since 1990-not a very healthy combination. But General Electric was the big market mover; equity markets looked in danger of pushing ahead until the bombshell that GE had missed its Q1 forecast and was cutting its full year numbers.

The question is, “Why the hell are markets still so high?”
I reckon the answer is all to do with a bunch of free-loaders. The hope/ fear is that all the suits in Washington take a break from their caviar and high quality cheeseburgers and announce something stronger than, “We’re all very concerned about the current turmoil in the financial markets.” It’s unlikely that G7 will agree on anything meaningful, other than the wine should have been French, not Californian. But shorting the market this afternoon isn’t worth the risk.

Next week should be great fun. Look out for details on Monday’s Weekly Wrap but, as a taster, there’ll be earnings from JP Morgan, Merrills and CitiGroup and plenty of inflation indicators spanning Europe, the UK and the US.

Finally, always be aware of the power of negotiation, whether it’s chipping the odd pip off your broker or reducing your dentist bill. Have a look at an expert:

Enjoy the weekend