BBC News
“UK interest rates rise for first time in 10 years.”
The official bank rate has been lifted from 0.25% to 0.5%, the first increase since July 2007. It is likely to rise twice more over the next three years, according to Bank of England governor Mark Carney. The move reverses the cut in August of last year, which was made in the wake of the vote to leave the European Union.
Almost four million households face higher mortgage interest payments after the rise, but it should give savers a modest lift in their returns. As well as many of the country’s 45 million savers, anyone considering buying an annuity for their pension will also see better deals.
The main losers will be households with a variable rate mortgage. Mr Carney expects banks to pass on the rate rise to savers, but said many mortgages, loans and credit cards would not see an immediate impact.
He said that British households have been «savvy» with their finances and have mostly taken out fixed-rate mortgages, which means it will take some time before the rise has an impact on them.The Bank estimates that almost two million mortgage holders have not experienced an interest rate rise since taking out a mortgage.
The panel which sets interest rates, called the Monetary Policy Committee (MPC), justified the rate increase by pointing to record-low unemployment, rising inflation and stronger global economic growth. Seven out of the nine members voted in favour of higher rates.
The pound fell about 1% against the dollar and euro, as some investors had hoped to see hints of more rate rises. Sterling dropped more than a cent against the two currencies to $1.3130 and €1.1280 respectively.
Bloomberg
“Venezuela Will Seek to Restructure Debt, Blaming Sanctions.”
President Nicolas Maduro said Venezuela will seek to restructure its global debt after the state oil company makes one more payment, blaming U.S. sanctions for making it impossible to find new financing.
The government will transfer funds for a $1.1 billion principal payment on Petroleos de Venezuela bonds that came due Thursday, Maduro said from Caracas. From there on out, the nation will renegotiate its debt with banks and investors, he said in a national address. Bonds of the state oil company and government notes maturing next year slumped in London trading on Friday.
It’s a step that Maduro and his late predecessor, Hugo Chavez, rejected for two decades — defying Wall Street analysts in recent years as cash drained from the government’s coffers, and making the nation’s debt one of the more profitable trades in emerging markets. By seeking a restructuring, Maduro is acknowledging that the heavy debt load for the oil exporting nation has become unsustainable amid a drop in crude output and prices, as well as the financial sanctions. He didn’t say if the country will make other debt payments that are coming due in the next weeks, creating a degree of confusion among investors.
Prices on PDVSA’s $3 billion of bonds maturing in 2027 were quoted at 20 cents on the dollar at 9:23 a.m. in London, according to pricing source CBBT. Venezuelan government bonds maturing in 2018 slid 16 cents on the dollar to 63 cents, while longer-maturity debt was little changed.
Even after the oil producer known as PDVSA made an $842 million principal payment Oct. 27, the nation is behind on about $800 million of interest payments. All told, there’s $143 billion in foreign debt owed by the government and state entities, with about $52 billion in bonds, according to Torino Capital.
Reuters
“U.S. job growth speeds up, unemployment rate falls; wages flat.”
U.S. job growth accelerated in October after hurricane-related disruptions in the prior month, but a sharp retreat in annual wage gains and surge in the number of people dropping out of the work force cast a cloud over the labor market.
Nonfarm payrolls increased by 261,000 jobs last month as 106,000 leisure and hospitality workers returned to work, the Labor Department said in its closely watched employment report on Friday. That was the largest gain since July 2016 but below economists’ expectations for an increase of 310,000 jobs.
Data for September was revised to show a gain of 18,000 jobs instead of a decline of 33,000 as previously reported. Some aspects of the report, however, were downbeat. Average hourly earnings slipped by one cent, leaving them unchanged in percentage terms, in part because of the return of the lower-paid industry workers. That lowered the year-on-year increase to 2.4 percent, which was the smallest since February 2016. Wages shot up 0.5 percent in September, lifting the annual increase in that month to 2.9 percent.
Still, October’s job growth acceleration reinforced the Federal Reserve’s assessment on Wednesday that “the labor market has continued to strengthen,” and probably does little to change expectations it will raise interest rates in December. The U.S. central bank has lifted rates twice this year.
BBC News
“Syrian army retakes IS-held city as Iraqis also advance.”
The Syrian army has retaken Deir al-Zour, the last major stronghold of so-called Islamic State (IS) in Syria, state TV says. Other reports said the Syrian army and its allies were clearing the last pockets of resistance from IS. IS had held most of the city since 2014. It was important because of its proximity to the border with Iraq.
Meanwhile Iraqi forces have entered one of the last towns under IS control on the other side of the border. They say they have also retaken the last border post between Iraq and Syria that was in IS hands.
The success of the Syrian government forces inevitably raises the potential for clashes between them and US-backed, predominantly Kurdish units who hold a significant swathe of northern Syria. It is a powerful reminder that while the war against the IS «caliphate» is well on the way to being won, the situation on the ground in Syria is becoming ever more complex.
The cross-border province of Deir al-Zour was also a symbol of the jihadists’ intention to eradicate all the region’s frontiers and lay to rest the 1916 Sykes-Picot agreement, an emblem of the colonial division of the area resented by many Arabs. Last month a US-backed alliance of Syrian fighters pushed IS out of Raqqa, In September, the Syrian army broke a siege by IS in part of Deir al-Zour that had trapped an estimated 93,000 civilians in an enclave on western bank of the Euphrates since 2015.