Flood Havoc and Interest Rates Convergence Between U.S. and UK

Flood Havoc and Interest Rates Convergence Between U.S. and UK

By Blu Putnam, Chief Economist & Erik Norland, Senior Economist, CME Group

Flood Havoc

  • Flooding delays crop seeding and imperils livestock, raising their prices
  • Flood damage adds to farm losses from ongoing trade war with China
  • Could U.S. exports of corn, soybeans be disrupted by the massive flooding?
  • U.S. is the world’s top exporter of corn, second in soybeans
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Are U.S. and UK Interest Rates About to Converge?

  • UK interest rates have lagged the multiple U.S. hikes amid Brexit uncertainty
  • Did Fed raise rates too soon and did UK take the correct interest-rate path?
  • SONIA, SOFR markets indicate UK and U.S. rates converging in the early 2020s
  • Pound could sink on ‘no-deal’ Brexit; a deal would rally pound vs dollar, euro
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