• Bond Markets UK Bond prices should fall as the market clamours to catch up pricing further BoE action, sending the yield curve higher. Although US Bond prices may have see a small drop when the BoE raise interest rates, US Bonds prices would likely rise as yield falls on Fed inaction
• Loans, Deposits, FX Forwards UK Loans would become more expensive and Deposits a little more attractive. This would see GBP:USD Forward points move further into negative territory as rates diverge
• Commodities Developed markets raising interest rates in the current low inflation environment may leave investors concerned that demand may drop and the economic recovery may stall. This concern of hampered demand may see commodity prices fall
• Currencies With more potential Fed action baked into the GBP:USD price than potential BoE action, a BoE rate rise without Fed action would see the Pound rise sharply against the Dollar
• Stock Markets As the BoE raises interest rates, UK stock markets could be seen retracing from the all-time highs enjoyed in recent months. Cheap money that has flocked to the stock market while searching out return should return to Bond markets that begin to offer improved yields
• House Prices As UK interest (and mortgage) rates move gradually upwards, recent growth in house prices might start to slow or even reverse. However, with supply limited and plenty of pent up demand in many locations, there might not be such a large impact unless interest rates rise significantly. Also worth noting that many UK variable rate mortgages currently enjoy a hefty rate collar compared to pre-crisis that could absorb some interest rate shock if needed

• Bond Markets US Bond prices should fall as the market clamours to catch up pricing further Fed action, sending the yield curve higher. UK Bonds prices may fall initially following US Bonds, although would rise later as yields fall on BoE inaction
• Loans, Deposits, FX Forwards US Loans would become more expensive and Deposits a little more attractive. This would see GBP:USD Forward points move closer towards 0 as rates converge
• Commodities Developed markets raising interest rates in the current low inflation environment may leave investors concerned that demand may drop and the economic recovery may stall. This concern of hampered demand may see commodity prices fall
• Currencies A Fed rate rise would see the market continue pricing in Fed action, and perhaps put pressure on Dollar loans abroad. Expect further Dollar strength against the Pound, suffering from converging interest rates
• Stock Markets As the Fed raises interest rates, US stock markets could be seen retracing from the all-time highs they have enjoyed in recent months. Cheap money that has flocked to the stock market while searching out return should return to Bond markets that begin to offer improved yields
• House Prices Historically, rising interest rates correlates well with falling house prices. In the US this could be the case after a sustained period of easy money has seen property prices recover after the 2007/8 falls

No BoE Interest Rate RiseNo Fed Raise Interest Rates

• Bond Markets Both UK and US Bond prices should rise as investors take all the yield they can get with the low rate environment continuing and the Yield curve again being depressed
• Loans, Deposits, FX Forwards Expecting little impact, with the potential for deposit and loan rates to fall even closer to Zero. Expecting Forward points to fall further into negative territory, with more Fed action currently priced in markets will have more US Forward expectations to unwind
• Commodities If Developed markets such as the UK and US put off raising rates, this would likely see some safe haven move into some commodities such as gold, although may also see a fall in some commodities like oil prices over concerns of the fragility of the recovery
• Currencies With more Fed action baked into the GBP:USD price than BoE, inaction from both Central banks would likely see a Dollar sell-off as expectations unwind and GBP:USD should trek higher
• Stock Markets BoE and Fed inaction should continue to see money invested in stock markets, keeping equities bid as money managers search for yield and find return in Stock markets that Bond markets can't compete with
• House Prices With interest rates remaining low - keeping money and finance cheap, property prices should continue to benefit, particularly in the UK where supply remains limited with pent up demand in certain areas

Fed Raise Interest Rates FirstBoE Raise Interest Rates Second

• Bond Markets US Bond prices should fall as the market clamours to catch up pricing further Fed action, sending the yield curve higher. UK Bonds prices likely fall after Fed action in anticipation of the BoE to follow, with further yield gains seen when the BoE raises rates
• Loans, Deposits, FX Forwards US Loans would become more expensive and Deposits a little more attractive, with UK rates following suit (potentially before a rate rise as Fed moves shift UK expectations). Forward points would likely move towards 0 initially before adjusting marginally back lower after BoE action
• Commodities Developed markets raising interest rates in the current low inflation environment may leave investors concerned that demand may drop and the economic recovery may stall. This concern of hampered demand may see commodity prices fall
• Currencies After an initial USD buying spree, with so little priced in for UK action, the Pound should stage a strong come-back retracing much of the loss once the BoE follows suit and raises interest rates
• Stock Markets As the Fed raise interest rates, US stock markets could be seen retracing from the all-time highs enjoyed in recent months. Cheap money that has flocked to the stock market while searching out return should return to Bond markets that begin to offer improved yields. UK equity markets should follow the US move, seeing larger retracement once the BoE takes interest rate action
• House Prices As interest (and mortgage) rates move gradually upwards, recent growth in house prices might start to slow or even reverse. In the US this could be the case after a sustained period of easy money has seen property prices recover after the 2007/8 falls. In the UK, with supply limited and plenty of pent up demand in many locations, there might not be such a large impact unless interest rates rise significantly. Also worth noting that many UK variable rate mortgages currently enjoy a hefty rate collar compared to pre-crisis that could absorb some interest rate shock if needed

BoE Raise Interest Rates FirstFed Raise Interest Rates Second

• Bond Markets UK Bond prices should fall as the market clamours to catch up pricing further BoE action, sending the yield curve higher. US Bonds prices likely fall after BoE action in anticipation of the Fed to follow, with further yield gains seen when the Fed raise
• Loans, Deposits, FX Forwards UK Loans would become more expensive and Deposits a little more attractive. After an initial move lower on the disappointment of a delay in Fed action, US Loan and Deposit rates should catch up (potentially before a rate rise as UK moves shift Fed expectations). Forward points would likely move more negative short term as the market adjusts for the diverging rates before retracing after Fed action
• Commodities Developed markets raising interest rates in the current low inflation environment may leave investors concerned that demand may drop and the economic recovery may stall. This concern of hampered demand may see commodity prices fall
• Currencies With the market expecting the Fed to raise rates before the BoE, a BoE interest rate rise before the Fed would certainly catch the markets out with a sharp Sterling appreciation against the Dollar. The Dollar should regain some ground once the Fed raise rates
• Stock Markets As the BoE raises interest rates, UK stock markets should retrace from the all-time highs enjoyed in recent months. Cheap money that has flocked to the stock market while searching out return should return to Bond markets that begin to offer improved yields. US equity markets should follow the UK move, seeing larger retracement once the Fed take interest rate action
• House Prices As interest (and mortgage) rates move gradually upwards, recent growth in house prices might start to slow or even reverse. In the US this could be the case after a sustained period of easy money has seen property prices recover after the 2007/8 falls. In the UK, with supply limited and plenty of pent up demand in many locations, there might not be such a large impact unless interest rates rise significantly. Also worth noting that many UK variable rate mortgages currently enjoy a hefty rate collar compared to pre-crisis that could absorb some interest rate shock if needed