Still Waiting for Rates to Settle?

The Big Story: Still Waiting for Rates to Settle?

For the past month the answer looked settled: rates were going up. Anyone with a mortgage to refinance, savings earning interest, or a pension transfer under consideration was planning around that. On Friday afternoon it reversed.

The cause was one American jobs report. The US lost 23,000 jobs in July, when forecasters had expected a gain of around 80,000. It was the first outright fall in this cycle. Within hours, markets went from expecting a US rate rise in September to expecting no move at all.

Do not over-read it. Traders still expect at least one US rise before the year is out. The case for higher rates is bruised and still breathing.

The direction is not the lesson here. How little it took to reverse the answer is. One monthly survey, covering a month that had already finished, undid four weeks of confident positioning in an afternoon.

Which raises a fair question about your own. If you moved money in July because rates were rising, you acted on a view with a four week shelf life. If you have been sitting in cash waiting for clarity, it arrived and pointed the other way. A globally diversified core, the Irish-domiciled accumulating UCITS funds we default to, held no opinion on any of it and finished the week at a record high.

That is the case for structure, made cheaply. A portfolio that never needed the forecast to be right did not need rescuing when it wasn’t.

What Else Is Moving

Your salary sacrifice now has a ceiling. If a UK employer still runs your payroll, you probably pay into your pension by salary sacrifice: your salary drops, your employer pays the difference in, and neither of you pays National Insurance on it. That changes on 6 April 2029. A law passed this April caps the exemption at £2,000 a year, and above that National Insurance applies on both sides. Income tax and your annual allowance are untouched. It reaches roughly 3.3 million workers, biting hardest on people saving hard in their forties and fifties.

Gold woke up, for a revealing reason. Gold rose about 7% this week, its first real move in over a month. The striking part is what failed to move it. Four weeks of open conflict in the Gulf produced nothing. A weak American jobs report produced this. Gold tracks where interest rates are heading, not where the headlines are loudest.

Malaysia shored up the ringgit. Bank Negara expanded its currency swap line with China’s central bank this month, taking it to RMB220bn. It works as a buffer if the ringgit comes under pressure, rather than as a stimulus. RHB and ANZ, not us, now expect the ringgit to strengthen to around RM3.80 against the dollar by year end.

The Expat Takeaway

A lot moved this week, and most of it will be revised or forgotten by October. The portfolios that shrugged were holding no opinion in the first place.

Three questions worth ten minutes this weekend. Is any part of your portfolio expressing a view on where rates go next, and did you choose that or absorb it? If you hold gold, is it structure, or insurance against a headline? And is your spread across sterling, euro, ringgit and dollar something you decided, or the residue of where you happened to be paid?

Then the useful part. Cash and short-dated bonds still pay more than they have in fifteen years, and that window is open precisely because nobody agrees on what comes next. The uncertainty is what pays you. If your answers above are all deliberate, this was a week to watch. If any of them is “it just ended up that way”, the work was never about this week.