UK bond market - heading for trouble

Yields continue to rise upwards despite what the BofE is doing.

Britain sold a government bond at auction on Wednesday that will pay investors an annual return of 5.668% - the highest yield of any gilt sold since 2007, as markets demand extra returns in anticipation of further Bank of England rate rises.

If, as I suspect, bond yields continue to trend upwards, then most of the world’s central banks will become hopelessly insolvent. The world has binged on cheap credit for so long it’s worth remembering that old saying:

There ain’t no such thing as a free lunch


Just seems like normalization while heading off inflation to me.

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London stock market dropping like a stone at the moment.

Looks like the actual end of the British Imperial Status of the Pound Sterling and the English economy as privately priced. If I were a Scot or Northern Irishman in nationality (have both genetically and in sympathies), I’d be pushing as hard as possible to launch and man ,the Gig of HMS UKofGB, and leave the sinking hulk manned by a pizzed (in both senses) crew and snowed and stoned officers as far behind and as fast as possible.

david fb
(happy smart rat am I)
(may be some great deals on London Real Estate in a couple years after the various Russian and Arab and Misc grandees move on to Dubai or whereever)

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Yeah, I have Irish and English family I am talking to about that. Not for me. Just my ideas on demand side econ. All shall rise from the ashes.

As an Irishman who cares to put it nicely.

Talking to OH and we both agreed that if we were in our 20’s we would be off, never to return.

There is too much going wrong with the UK at the moment.

You mean like to some place in the EU?

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The Captain

9 8 7 6 5 4 3 2 1 takeoff!


Never buy into the bottom. Leave that to the rich.

The duration of these bonds is for 2 years. Another interpretation is that the UK government expects interest rate and inflation levels to have come down by the end of this period and doesn’t want to be committed to such a rate at this level any longer than it believes necessary. If this doesn’t happen
a perhaps more cynical interpretation would be that there’s going to be an election before this bond expiry and with the likelihood that Labour will be returned if inflation doesn’t fall, the incoming Labour government would have to deal with the problem.


Oh yes, I would give that possibility a big bingo and scratch the cynical disclaimer.! Key pieces of USA politics have also become deeply devoted to such egregiously destructive tactics, all the while talking about “strenghtening the economy.” But the USA is still rich enough to be able to afford messing its own nest whilst UKofGB seems to have moved on from merely messing to burning the roof beams to stay warm for one more night… even though its summer. Winter is coming. After that, then maybe cheerful Leap’s “rise from the ashes” might occur.

david fb


The BoE is independent of that sort of politicking.

I get everyone speculates but you have seen nothing yet for mismanagement if that were the case.

A short duration can mean the market wont buy the longer bonds. That does not mean the market is rational.

That is the Welchian CEO scenario: hollow out the company to juice short term profits, and CEO bonus, because, when the roof caves in, someone else will be CEO.