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:
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.
(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)
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.