UK Assets Plunge, 5 Year Bond Yields Soar

In the financial markets on the 23rd, British bonds plunged, and the pound fell to its biggest drop in 37 years. The UK government has announced a comprehensive economic stimulus package, but traders say the measures could undermine the Bank of England’s aim to suppress inflation.

When British Finance Minister Kwartengu revealed details of economic measures through tax cuts and fiscal stimulus, the five-year bond yield temporarily rose 54 basis points (bp, 1bp = 0.01%) to 4.08%. That was the biggest increase since Bloomberg began collecting data in 1992. The pound fell further against the dollar, temporarily falling 2.1% to $1.1021.

“The combination of rising UK bond yields and weaker sterling is a very worrying combination, suggesting that markets are pricing in a risk premium for the UK,” said Mike Liddell, portfolio manager at Allianz Global Investors. “It clearly shows that the UK’s credibility to contain inflation is at stake.”

With the Bank of England expected to tighten monetary policy much tighter with this move, money markets have raised their expectations for rate rises, and the next monetary policy decision to be made in November will raise interest rates by 1 point percentage in full. weaving into the fact that there were Markets were not even pricing in an increase of 0.75 percentage points before the comments of Finance Minister Kwartengu.

The biggest tax cuts since 1972 in the UK to boost economic growth

Original title:UK Assets Tank as Fiscal Excess Puts Policy Credibility at Risk

*POUND EXTENDS LOSSES AGAINST US DOLLAR, DOWN 2.1% TO $1.1027

*TRADERS PRICE IN 100 BASIS POINTS OF BOE RATE RAISE IN NOVEMBER (抜粋)

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