Gilts are facing a tumultuous period as yields rise, while GBP is declining, indicating fiscal de-anchoring and possibly capital flight from the UK.
The Chancellor's absence during the UK market crisis has left participants frustrated, with calls for definitive spending cuts rather than vague political responses.
The UK's economic situation is complex, characterized by stagnant growth and persistent inflation, leading to a stagflationary environment that complicates policy responses.
In light of historical trends, the market sentiment leans towards shorting GBP assets, anticipating further challenges stemming from the current fiscal backdrop.
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