| Bond vigilantes. on 12:55 - May 13 with 396 views | DJR |
| Bond vigilantes. on 09:32 - May 13 by nrb1985 |
Not sure you can say that the bond market is showing short termism here.
The front end of the bond curve, i.e. the shorter maturity gilts, have remained reasonably well anchored.
It's the longer duration bonds that have sold off because of concerns about what a new more left leaning fiscal regime will do to the UK's ability to pay down it's debt in the long run.
If Starmer wanted to really bring bond yields down he should be far bolder on Europe. He has nothing to lose now so may as well put deeper integration if not rejoining fully on the table. I'd vote for that! |
I suppose short-termism was the wrong word to use in the context of longer term gilts but it seems to me that there are a number of factors affecting the position of the UK - an outlier in terms of high bond rates - including the one you mention.
Those that I have seen mentioned, in addition to the fact that UK bond rates have ratcheted up a notch generally since Truss, include political instability, the prospect of a Reform government, the likelihood that interest rates now won't come down and the fact that the UK economy is predicted to be worst affected by the war in the Middle East.
I would argue that Burnham is not the left wing ogre that he is being portrayed, because he was a fairly orthodox member of the Blair and Brown government. And I think he is savvy enough to know the strength of the bond markets.
I suppose it is also possible that Streeting becomes leader and I would have thought that itself would make little difference when it came to the fiscal position because he is on the right of the party.
Perhaps the greatest danger is Rayner but then she is not the person I would favour as a replacement.
All of this is not to say that a leadership challenge wouldn't cause some upset in the bond market which I would hope would not be permanent with the right leader but I just can't see that things can carry as they with a despised and lame duck PM.
As regards the EU, the Labour manifesto ruled that out, and I am not sure any candidate would go for that. But if we re-joined, and joined the Euro we would benefit from their lower borrowing costs. [Post edited 13 May 13:12]
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| Bond vigilantes. on 13:27 - May 13 with 335 views | WeWereZombies |
| Bond vigilantes. on 10:52 - May 12 by TheMoralMajority |
Very disappointed to discover that this is not a thread about Blofeld |
I was thinking more 'Breaking Bad' and Saul getting in too deep when one of his clients failed to meet bail. |  |
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| Bond vigilantes. on 09:55 - May 19 with 181 views | DJR |
This was the sort of short-termism (ie, short term events) I was trying to get at.
"The yield, or interest rate, on the 10-year gilt (as UK government bonds are known), dropped 5 basis points to 5.07%. This means that the 10-year yield is back at levels seen before a jump on Friday. The 30-year yield fell 4 basis points to 5.7%.
Markets are reacting to news that Andy Burnham, the main contender to challenge prime minister Keir Starmer, has signalled that he will not relax Starmer’s and the chancellor Rachel Reeves’ fiscal rules. Burnham is the leftwing mayor of Greater Manchester and is gearing up to fight a byelection in Markerfield, so he can challenge Starmer for the leadership of the Labour party."
And interestingly the UK is not alone in the overall rise in bond yields caused by events in the Middle East.
This from Jim Reid of Deustche Bank yesterday.
"Admittedly, if you look over the entire conflict, bond yields have moved in lockstep with oil, and Friday doesn’t look too anomalous. However, if you zoom in a bit, then yields have shifted from being broadly in line with the current price of oil to looking a bit high relative to it. That suggests some evidence of a small decoupling on Friday.
With these end-of-week moves, 30yr US yields hit their highest level since 2007, 30yr Japanese yields their highest since their introduction in 1999, 30yr gilts reached levels last seen in 1997, and 30yr German yields returned to 2011 levels." [Post edited 19 May 9:56]
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| Bond vigilantes. on 10:18 - May 19 with 152 views | DJR |
I've heard Lord O'Neil, a former Tory Treasury minister and inventor of the expression BRICS, talk about Andy Burnham twice in the last few days.
He's a crossbencher these days and seems very supportive of Burnham. He also mentioned he'd had a hand in Reeve's tweak of the fiscal rules to allow more borrowing for investment.
He takes a view that a lot can be achieved in terms of growth even within the constraints of the financial markets, and pointed to the fact that Burnham has apparently made Manchester the fastest growing area in the country for quite a few years.
I wouldn't be surprised if he takes on a role if Burnham becomes PM. | | | |
| Bond vigilantes. on 10:20 - May 19 with 142 views | Radlett_blue |
| Bond vigilantes. on 09:55 - May 19 by DJR |
This was the sort of short-termism (ie, short term events) I was trying to get at.
"The yield, or interest rate, on the 10-year gilt (as UK government bonds are known), dropped 5 basis points to 5.07%. This means that the 10-year yield is back at levels seen before a jump on Friday. The 30-year yield fell 4 basis points to 5.7%.
Markets are reacting to news that Andy Burnham, the main contender to challenge prime minister Keir Starmer, has signalled that he will not relax Starmer’s and the chancellor Rachel Reeves’ fiscal rules. Burnham is the leftwing mayor of Greater Manchester and is gearing up to fight a byelection in Markerfield, so he can challenge Starmer for the leadership of the Labour party."
And interestingly the UK is not alone in the overall rise in bond yields caused by events in the Middle East.
This from Jim Reid of Deustche Bank yesterday.
"Admittedly, if you look over the entire conflict, bond yields have moved in lockstep with oil, and Friday doesn’t look too anomalous. However, if you zoom in a bit, then yields have shifted from being broadly in line with the current price of oil to looking a bit high relative to it. That suggests some evidence of a small decoupling on Friday.
With these end-of-week moves, 30yr US yields hit their highest level since 2007, 30yr Japanese yields their highest since their introduction in 1999, 30yr gilts reached levels last seen in 1997, and 30yr German yields returned to 2011 levels." [Post edited 19 May 9:56]
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Nigel Lawson, when Chancellor of the Exchequer, used the term "teenage scribblers" to deride City analysts who criticised his economic policies.
The reality is somewhat more nuanced. The UK, like most countries, needs to roll over a considerable amount of government debt every month & the markets will take a view on the attractiveness of that debt, depending on the yield & the view of the UK's financial stability & prospects. Hence the Truss/Kwarteng budget, involving £45bn of unfunded tax cuts, was almost immediately rendered impossible by financial markets. |  |
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| Bond vigilantes. on 13:08 - May 19 with 99 views | stonojnr |
| Bond vigilantes. on 10:31 - May 12 by nrb1985 |
Not sure you’ve entirely understood what a bond vigilante is. |
Is it like Jason Bourne... |  | | |
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