Me: on how there has been way too much fuss around these gilt market moves. They bring the worst out in the government. Gilt moves are no verdict on current policy. Reacting violently bad vibes creates silly policy spasms. Grow a thicker hide. www.instituteforgovernment.org.uk/comment/gilt... - ThreadSky

gilesyb.bsky.social • 46 days ago

Me: on how there has been way too much fuss around these gilt market moves. They bring the worst out in the government.

Gilt moves are no verdict on current policy. Reacting violently bad vibes creates silly policy spasms. Grow a thicker hide.

https://www.instituteforgovernment.org.uk/comment/gilt-market-rachel-reeves

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jimob1.bsky.social•46 days ago

Agree to a point. Reeves made much of 'reassuring markets' without putting policy meat on strategy bones. But now the plan is clear, unimpressed markets have priced it accordingly. So yes, much froth despite fundamentals largely unaltered, but a vote on Reeves' competance which ain't nothing.

juneussell.bsky.social•46 days ago

You think it’s all down to her then?

jimob1.bsky.social•46 days ago

She's a contributing factor. Government investment is part of gdp (growth) formula and there's no way meagre government investment will wash its face before the next election, hence austerity/tax rises down the track. But as said moves in $ etc. have been priced in too.

stamps50.bsky.social•46 days ago

What is it that you think markets have priced?

jimob1.bsky.social•46 days ago

Balanced budgets prioritised over growth. Markets not unduly concerned about deficit, but can't see a coherent plan to kickstart growth. But if you're alluding to moves in $, then absolutely. Everything is relative and many things go into the mix.

stamps50.bsky.social•46 days ago

I think the story about growth is overblown. Aside from international moves, gilt yields are explained much more by expectations of interest rates than any comment on the chancellor

jimob1.bsky.social•46 days ago

Don't disagree. If $ moves so does £ etc. However, after all the political capital expended on reassuring markets (at the expense of the real economy) no one believes she will turn the ship around. This doesn't help.

bathosprey.bsky.social•46 days ago

Adam Tooze’s brings some reality to the supposed bond yield crisis in his newsletter.

dpmanchee.bsky.social•46 days ago

How do gilt investors detect changes in market moves ?

How well do statistical approaches such as Moving average convergence/divergence (MACD) cope in a time of economic change (war in Europe, pandemic, ...) ?

marketscalpel.bsky.social•46 days ago

Good article striking the right balance. Reeves is walking something of a tightrope, however, and there's no shortage of voices barely able to contain their enthusiasm to see her fail and for a genuine crisis to develop. But fiscal caution also brings real risks to growth. Very, very tricky path.

gmacdonell.bsky.social•46 days ago

Serious question: are moves in 10-y Gilt yields even commentary on UK government policy, leaving aside the validity of that commentary?

I get that yields influence what policy should be, but do they really reflect it? In the case of a fiscal risk premium I guess they would. But are you there?

gilesyb.bsky.social•46 days ago

no I don't think they are, beyond inflation expectations. Broader forces driving e.g. real rates are likely to be international, I guess?

But IIRC your great content from times past I should be asking you more than the other way round!

gmacdonell.bsky.social•46 days ago

Thank you. But not my thing.

Dom White has convinced me that folks are confusing the silliness of blaming her for externally driven rates moves with the idea that she should ignore those moves. Maybe Britain is a price taker in r*?

They are very different things.

gilesyb.bsky.social•46 days ago

absolutely can't ignore r*. It is a key input in all sorts of calculations. They are constitutionally unable to ignore it

gmacdonell.bsky.social•46 days ago

I wish all of macro were as easy as identifying that helicopter money was a no hoper, simple confusion.

richvivv.bsky.social•46 days ago

You're right of course. But the media and right-wing punditry were complicit, adopting faux-ignorance to pitch it all as Reeves' Liz Truss moment.

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