Typically, higher yields typically boost a currency, but the decline points to capital flight driven by fears of persistent inflation and fiscal instability.
Rising borrowing costs also strain Chancellor Rachel Reeves, whose fiscal flexibility is shrinking. Inflation fears also persist, with CPI, wage growth, and inflation expectations rising.
We've seen a global bond sell off driven by elevated inflation globally, volatile politics and political policy and increasing government debts.
UK government bonds have been punished and sold off more so than the rest of the world due to concerns around sticky inflation.
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