🚨How worried should Rachel Reeves be about rising bond yields?
😨How worried should the rest of us be?
😱And is this a repeat of 2022 (or even worse)?
After all, UK 30yr govt bond yields are now at the HIGHEST level in more than a quarter century.
📽️My 4min explainer👇 https://www.youtube.com/watch?v=1mDxH9LDUBw
😨How worried should the rest of us be?
😱And is this a repeat of 2022 (or even worse)?
After all, UK 30yr govt bond yields are now at the HIGHEST level in more than a quarter century.
📽️My 4min explainer👇 https://www.youtube.com/watch?v=1mDxH9LDUBw
Comments
Here's a few of the key charts.
Let's start with the big picture.
Here's the 10 and 30 year gilt yields over the past few decades. As you can see, they're currently at the highest level since 2008 (10yr) and 1998 (30yr).
Higher than in Oct 2022 after the mini-Budget
Back then we were fighting an energy price shock. Plus the BoE was just beginning to reverse QE.
So it's a reasonable question to ask: is today actually WORSE than 2022?
Put those two things together - plummeting currency, soaring yields - and it's often a sign folks are pulling money out of the country.
That happened in 2022.
£ plunged to record low
But - importantly, on a the trade weighted basis sterling is stronger than& more stable now
That's what happened in 2022. The sharp increases in UK yields couldn't be explained by moves happening in other countries.
But this time, save for a few days after the Budget, the UK is moving in lockstep with the US
Krugmsn very helpful on the likely cause of rising bond yields in the US. Inflationary contagion is likely the reason for our 10 yr gilts rising too. https://paulkrugman.substack.com/p/is-there-an-insanity-premium-on-interest?utm_campaign=post&showWelcomeOnShare=true