Bad news for those looking to buy a house in the UK: mortgage rates are moving up again.

Moneyfacts has reported that the average fixed-term mortgage rates have risen this morning, even though the Bank of England cut interest rates last week.

They report:

• The average 2-year fixed residential mortgage rate today is 5.48%. This is up from 5.44% the previous working day.

• The average 5-year fixed residential mortgage rate today is 5.21%. This is up from 5.17% the previous working day.

Several banks have raised their mortgage rates in recent days, such as Santander, TSB, HSBC, Virgin Money and Nationwide Building Society.

This follows a pick-up in the yields (rate of return) on UK short-term government bonds since the budget. They are used to price mortgage rates, and have risen as traders have anticipated higher borrowing.

Donald Trump’s election victory last week is continuing to shift the markets.

The pound has dropped to its lowest level against the US dollar since early July this morning, down half a cent to $1.2653.

On election day, sterling was worth $1.30, but it has been sliding since as traders have anticipated that Trump’s tax cuts and tariffs will be inflationary, meaning US interest rates stay higher.

The euro has dropped to a one-year low, at €1.0524 against the US dollar.

These latest losses came as the Republicans secured a majority in the US House of Representatives, which could give Donald Trump sweeping power to enact his legislative agenda.

Kathleen Brooks, research director at XTB, fears the pound could head lower….

President Trump’s clean sweep at last week’s election has been confirmed with the Republicans winning the House. This was expected; however, it gave the dollar a boost overnight, and GBP/USD sunk below $1.27.

If we don’t see a stabilization in the pound, then it opens the door to a further decline to $1.25. There were some concerns that winning the trifecta of elections could give President elect Trump concentrated power, however, his choice of John Thune for Senate majority leader is interesting – he has clashed with Trump before and was not Elon Musk’s choice for the role.

This suggests two things: firstly, that the Trump administration could surprise us. Secondly, that although Republicans now control the main organs of power in the US, the President elect may not get his way on all matters. The question is whether this appointment will halt the Trump trade, stocks are pointing to a lower open in the US, although the dollar remains upbeat.

Stephen Innes, managing partner at SPI Asset Management, predicts a “full-blown dollar tsunami’ once Trump is back in the White House:

Investors are caught in a whirlwind of global uncertainty and trade anxieties. With Trump’s anticipated tariffs looming like storm clouds, those markets in the line of tariff fire are bracing for impact.

I hope you’re not underestimating what’s brewing because Trump’s trade and domestic agenda is setting up a US dollar moonshot like we’ve never seen. This week’s price action? Just a tremor before the full-blown dollar tsunami that’s bound to hit with Trump’s second term.

In other energy news, the International Energy Agency has predicted that the oil market will run a surplus next year.

In its latest monthly report, the IEA says that concerns over the health of the global economy have hit the oil price in recent weeks, with Chinese demand contracting for a sixth straight month in September.

It predicts that the oil market will be “well-supplied” in 2025; the IEA estimates that oil consumption will rise by 990,000 barrels per day next year, while non-OPEC+ supply is expected to grow by 1.5 million barrels per day in 2025.

As a result, even if the Opec+ group continues to postpone its planned production increase, the IEA reckons supply will outpace demand.

It says:

Our current balances suggest that even if the OPEC+ cuts remain in place, global supply exceeds demand by more than 1 mb/d next year.

With supply risks omnipresent, a looser balance would provide some much-needed stability to a market upended by the Covid pandemic, Russia’s full-scale invasion of Ukraine and, most recently, heightened unrest in the Middle East.

UK and European gas prices have risen to their highest levels in a year.

The European gas benchmark has risen by 4.5% this morning to €45.65 per megawatt hour, the highest since November 2023.

The price of next-day gas in the UK is also trading at its highest since last November, up 4% to 115p per therm.

The increase comes as colder weather in Europe drive up demand for heating. Low wind speeds have also caused a “dunkelflaute” in the region, meaning less power could be generated by wind farms.

A drop in supplies from Russia is also a factor.

Bloomberg is reporting that Russia’s Arctic LNG 2 project has slashed output at its gas fields to nearly zero so far this month, due to western sanctions.

And….Germany has warned its state-operated gas import terminals to reject any Russian cargoes of liquefied natural gas, after it was notified of a planned shipment, the Financial Times reports this morning.

According to the FT, the German economy ministry has instructed Deutsche Energy Terminal “not to accept any deliveries of Russian LNG”.

A third possible factor is that Austrian oil and gas group OMV has been awarded €230m by the International Chamber of Commerce (ICC) over irregular German gas supplies from Russia’s Gazprom.

OMV plans to offset the claim against its bills to Gazprom Export to obtain its compensation, but there are concerns that Gazprom could potentially stop supplies to Austria in response.

Austrian energy minister Leonore Gewessler wrote in a post on X yesterday:

The current developments surrounding the OMV supply contract for Russian gas are to be taken seriously, but do not pose an immediate threat to our security of supply. We have always known that gas supplies from Russia are unsafe.

“We have been preparing for a possible supply disruption for a long time. In any case, our country’s gas supply is secure. Our gas storage facilities are full.”

Luxury fashion group Burberry has announced a turnaround plan that aims to revitalise its sales and cut costs.

Burberry’s new CEO, Joshua Schulman, told the City this morning that his ‘Burberry Forward’ plan will “reignite brand desire”, improve performance and drive long-term value creation.

Schulman says he is aiming to attract a broad base of luxury customers, and criticises his predecessors for moving “too far from our core with disappointing results,” by trying to be modern rather than focusing on the firm’s traditional strengths.

Schulman explains:

We recognise there is much to be done in the short term, and we are acting with urgency. We are confident we can get back to generating £3 billion in annual revenue over time, while rebuilding margins and driving strong cash generation.

Burberry is also launching a cost savings programme to save £40m per year, and also suspending its dividend.

Burberry has also reported that revenues fell 22% year-on-year in the six months to the end of September, meaning it made a loss of. £53m, down from a profit of £223m the previous year.

The IPPR thinktank are hopeful that combining the UK’s 86 separate Local Government pension schemes into a single pot will help drive investment.

Dr George Dibb, associate director for economic policy at IPPR, says:

“With the lowest levels of investment in the G7—and among the lowest in the developed world—the UK has languished at the bottom of the league for 24 of the past 30 years. These pension fund reforms should help to end that.

“Consolidating pension pots into ‘megafunds’ will unlock substantial capital for UK investment, enabling more high-impact, high-return ventures. Paired with a comprehensive industrial strategy and the highest levels of public investment since the 1970s, these reforms will help shift the UK economy toward sustained investment and growth.”

Chancellor Rachel Reeves is to lay out plans today to create pension “megafunds” in a drive to to increase infrastructure investment.

Reeves will tell the City tonight that she will introduce a new pensions bill next year, to pool assets from the 86 separate local government pension schemes (LGPS) into larger vehicles.

Those 86 defined-benefit schemes cover 6.5 million members and £360bn in assets. Putting them into larger pots would create a set-up similar to those in Australia and Canada, where single large pension funds managed by professional investors invest more in infrastructure

The chancellor will tell an audience of City leaders and chief executives at the Mansion House tonight that the plan could unlock £80bn of investment.

Reeves says:

Last month’s Budget fixed the foundations to restore economic stability and put our public services on a firmer footing. Now we’re going for growth.

That starts with the biggest set of reforms to the pensions market in decades to unlock tens of billions of pounds of investment in business and infrastructure, boost people’s savings in retirement and drive economic growth so we can make every part of Britain better off.

But… there are concerns that the plan could put people’s retirement savings in danger.

Tom Selby, director of public policy at AJ Bell, fears that the interests of savers may be left behind as ambitious measures could put savers’ money at risk and undermine their retirement goals.

Selby says:

The government’s hope will be that by moving from having 86 local government schemes down to a single one, or a few, will benefit from economies of scale.

My overarching concern is that the needs of the saver, whose money is ultimately going to be risked, will be forgotten about. There’s a reason that an occupational scheme has a trustee to look after the interests of members. Part of that is investing their money to maximise returns and get the best retirement outcomes possible.

Selby adds:

Conflating a government goal of driving investment in the UK and people’s retirement outcomes brings a danger because the risks are all taken with members’ money. If it goes well, everyone can celebrate. But it’s clearly possible that it will go the other way, so there needs to be some caution in this push to use other people’s money to drive economic growth.

It needs to be made very clear to members what is happening with their money. One of the strengths of the system we have today is that investment decisions for members of defined contribution (DC) default funds and defined benefit (DB) schemes have independence baked in, usually via the appointment of trustees. Those trustees are required to make those decisions first-and-foremost with the aim of delivering the highest possible income in retirement for members.

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

UK tenants are facing a “chasm” when trying to find a property to rent, surveyors are warning today, as demand rises and the supply of rental properties falls.

The Royal Institution of Chartered Surveyors (RICS) has reported that renters are being squeezed by lower supply and rising prices in the lettings market. A net balance of +19% of surveyors polled reported that tenant demand in their area increased over the last three months.

At the same time, landlord instructions, which measures how many landlords are making their property available for rent, fell over the quarter.

RICS’s UK Residential Market Survey found that a net balance of +33% of respondents expects rental prices to be driven higher over the coming three months, due to this mismatch between supply and demand.

RICS says that “woes for renters persist” as rental properties continue to disappear from the market and demand remains resilient in most regions.

RICS president, Tina Paillet, said:

Our data continues to indicate that renters are feeling the pressure from a limited supply of rental properties and rising rents.

While the Autumn Budget announcement of immediate stamp duty increases for landlords acquiring rental properties may increase opportunities in supply for owner-occupiers, it will make it more challenging to address the critical shortage of rental homes.

RICS’s latest monthly survey also found that UK house prices continued to rise in October, although they did drop in Yorkshire and the Humber, and the South West of England.

More surveyors expect prices to rise over the next year than to fall.

RICS says:

Virtually all parts of the UK are expected to see a rise in house prices in the year to come, led by firm growth across Northern Ireland and Scotland.

The agenda

• 9.30am GMT: UK mortgage and landlord possession statistics: July to September 2024

• 10am GMT: IEA’s monthly oil market report

• 10am GMT: Eurozone GDP for Q3 2024

• 10am GMT: Eurozone employment report for Q3 2024

• 1pm GMT: Bank of England policymaker Catherine Mann gives a speech on “Revitalising the global economy”

• 1.30pm GMT: US PPI index of producer price inflation for October

• 1.30pm GMT: US weekly jobless claims

• Tonight: Mansion House speeches from Rachel Reeves and BoE governor Andrew Bailey