Bond investors are reacting negatively to Reeves' borrowing strategy, resulting in significant sell-offs of gilts and driving up yields. This reflects growing concerns over the sustainability of proposed borrowing and spending plans.
The market's adverse reaction is evident as the pound fell 0.6% immediately after the news, indicating that investor confidence is shaken by increased supply forecasts and economic policies.
The OBR projects an alarming average increase of over £30bn per year in gilt issuance for the next five years, culminating in around £300bn this fiscal year, significantly impacting market dynamics.
Yields in the gilt market have surged sharply, with a notable rise of 30 basis points in just 24 hours, showcasing heightened volatility and investor anxiety in response to expanded borrowing.
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