"As financial traders milled around 26 floors up in a tower in the Canary Wharf district of London, there was little sign of nerves ahead of Rachel Reeves's second budget until the surprise accidental early release of the government's official economic analysis started to move markets. Headline numbers from the Office for Budget Responsibility (OBR) flashed through on banks of computer screens, followed shortly by the detailed analysis itself."
"It was a chaotic start to the budget, but more important for financial investors and the Treasury was the reaction on currency and bond markets. The Labour government was desperate to avoid a repeat of the Liz Truss mini-budget debacle, when borrowing costs surged, eventually bringing about the downfall of the Conservative government. The reaction on Wednesday was choppy, but not dramatic by the standards of the Truss government."
"The yield on the benchmark 10-year gilt a measure of the cost of government borrowing dropped quickly from 4.5% to about 4.42%. A few minutes later it was back up above 4.52%. By the late afternoon yields had fallen back once more, to 4.4%. The declining borrowing cost over the day will likely be a relief for Reeves and a sign that markets do not think lending money to the UK has become more risky."
Financial traders in Canary Wharf reacted quickly when the government's economic analysis was accidentally released early, with OBR headline numbers flashing across screens and the detailed 200-page analysis following. The leak triggered a scramble across trading desks to assess the forecasts. Market focus centered on currency and bond markets, with the 10-year gilt yield moving intraday from about 4.5% down to 4.42%, rising briefly above 4.52%, and settling near 4.4% by late afternoon. The overall decline in borrowing costs suggested a reduced risk premium and offered relief to the government regarding market perceptions of UK lending risk.
Read at www.theguardian.com
Unable to calculate read time
Collection
[
|
...
]