The global bond sell-off, primarily driven by persistent inflation concerns and volatile political landscapes, particularly in countries like the UK, indicates a troubling outlook for borrowing costs.
Markets have adjusted expectations for Bank of England cuts, with predictions dropping from 60bps to 40bps for this year, suggesting skepticism about easing monetary policy anytime soon.
With rising gilt yields affecting borrowing costs and fiscal limits being reached, the UK government faces pressure to either cut spending, raise taxes, or increase borrowing.
The economic landscape risks entering a stagflationary or recessionary phase, as the UK grapples with high inflation amidst poor growth projections.
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