• 3 minutes "Biden Is Running U.S. Energy Security Into The Ground" by Irina Slav
  • 6 minutes How Far Have We Really Gotten With Alternative Energy
  • 9 minutes "How to Calculate Your Individual ESG Score to ensure that your Digital ID 'benefits' and money are accessible"
  • 7 days 87,000 new IRS agents, higher taxes, and a massive green energy slush fund... "Here Are The Winners And Losers In The 'Inflation Reduction Act'"-ZeroHedge
  • 5 days Energy Armageddon
  • 3 days "Natural Gas Price Fundamental Daily Forecast – Grinding Toward Summer Highs Despite Huge Short Interest" by James Hyerczyk & REUTERS on NatGas
  • 13 hours "Forget Oil, The Real Crisis Is Diesel Inventories: The US Has Just 25 Days Left" by Zero Hedge - 5 Stars *****
  • 20 hours "The Global Digital ID Prison" by James Corbett of CorbettReport.com
  • 17 hours "Europe’s Energy Crisis Has Ended Its Era Of Abundance" by Irina Slav
  • 20 hours The Federal Reserve and Money...Aspects which are not widely known
  • 4 days Oil Stocks, Market Direction, Bitcoin, Minerals, Gold, Silver - Technical Trading <--- Chris Vermeulen & Gareth Soloway weigh in
  • 2 days Is Europe heading for winter of discontent with extensive gas shortages?
  • 5 days Сryptocurrency predictions
  • 2 days Goldman Betting on Cryptocurrencies
  • 10 days Putin and Xi Bet on the Global South
City A.M

City A.M

CityAM.com is the online presence of City A.M., London's first free daily business newspaper. Both platforms cover financial and business news as well as sport and…

More Info

UK Debt Rates Surge As Pound Plunges Against The Dollar

Rates on UK debt surged higher today and the pound trailed the US dollar again driven by investors sweating over the government’s tax and borrowing splurge.

The yield on the 30-year UK gilt jumped six basis points to 5.048 percent, the highest since 1998.

Investors were demanding a greater return ahead of the government today selling a tranche of long-dated debt.

The pound slid 0.4 percent against the US dollar to hover around the lowest level in 37 years, but is above the record low of nearly $1.03 it hit at the beginning of the week.

Yield on 30-year UK gilt

The return on the 30-year UK gilt has climbed to its highest level since 1998 (Source: CNBC)

The pound is down over 20 percent against the greenback this year and around six percent against the euro.

Traders expect the Bank of England to steeply hike interest rates in response to surging inflation, which is running at a 40-year high of 9.9 percent, and the government’s tax cut and borrowing splurge.

“One of the reasons for the explosion in gilts is the sovereign premium – markets holding their noses at unfunded, untargeted tax cuts – the other is just simply that the market thinks the budget is going to force the Bank into much more tightening than it had planned,” Neil Wilson, chief markets analyst at Markets.com, said.

Last Friday, Chancellor Kwasi Kwarteng signed off £45bn worth of tax cuts, including scrapping the top 45 percent income tax rate and reversing the corporation tax and national insurance rises.

No public spending cuts were announced, meaning the government will have to borrow more money.

Kwarteng tried to calm City executives and Tory MPs’ concerns over the market jitters yesterday. According to Sky News, he will ask bankers today not to short the pound, however, the Treasury has denied the meeting will take place, according to Reuters.

Related: Will Oil Prices Bounce Back Above $100 This Year?

Last night, the International Monetary Fund, the world’s lender of last resort, urged the chancellor to rethink his fiscal plans to prevent inflation trending higher.

Governor Andrew Bailey and co have lifted rates from a record low 0.1 percent to 2.25 percent since December, including two successive 50 basis point hikes.

The chief economist of Threadneedle Street, Huw Pill, said yesterday recent UK market turmoil which has seen sterling hit a record low against the greenback and debt costs surge, will require a “significant” response from the Bank.

That likely means a super-sized rate hike of as much as 100 basis points at the monetary policy committee’s next meeting on 3 November.

Markets are ditching bonds, which is sending yields higher, in response to the government stepping up borrowing. Yields and prices move inversely.

By CityAM

More Top Reads From Oilprice.com

Join the discussion | Back to homepage

Leave a comment

Leave a comment

EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News