Just when you thought things couldn’t get any sillier, the FTSE has started today’s session with a bounceback “because” said several pundits, “some investors are gambling that Carney will signal a more bullish outlook for rates”.

Now, nobody is that stupid. Bank of England Governor Mark Carney has said openly to anyone who asked him in the first five weeks of 2016, that the UK economy is definitely too weak to handle a rate rise. This is in direct opposition to what David Cameron says at every PMQs – “we have a strong economy building up a head of steam” – but there’s nothing new there.

So why are investors doing this?

Last night, nobody expected anything but a nervous market today. But in the City itself, before trading opened this morning, one of those ‘this is inside track – be prepared for a surprise’ rumours did the rounds about the Governor’s speech. Such things are standard before a rates meeting. But this wave of gossip appears to have taken hold.

Investors began piling into the Quid at around 7.40 am:


One can’t be sure what exactly happened. My guess would be that in the light of an allegedly falling likelihood of Brexit (after yesterday’s Cameron attempt to make a sow’s ear look like a silk purse) person or persons unknown decided to bet on a bullish stock market start and/or rising Sterling before the FOMC decision….and then a fall after the Carney blah-blah-blurb. Then kicked off the rumour about, say, bullish BoE rate futures.

The rumour looks as if it’s now taken a firm hold:


The other (in my view far less likely) possibility is that Carney is going to sound optimistic, and there’s been a leak.

Events like this take place under the Bourse regulation radar every day all around the globe. The loser from this little bit of ‘directionalising’ is going to be sap money; but the ethics or legality of this aside, what good at all does this kind of trading do the real economy? And the answer is important: it’s a perversion of the original idea of bourses being a chance for the wider community to invest in socially functional growth. Because it cons investors into thinking a rumour is true.

Such things have wider ramifications. For example, since I began this post the ECB has cut its eurozone inflation target by half to 1%. That’s a very bad economic sign indeed over there in the rubble that is still our biggest trading partner. So far, the FTSE has ignored it, and maybe it will make Sterling stronger still in the very short term; but as an ecoomic indicator, it is still far more important than some Canuck banker dividing zeros.

It is no way to run a railroad. Or a pissup in a brewery. Or indeed, anything.