"The selling pressure accelerated this morning, with 10-year gilt yields moving sharply higher toward 4.54% and sterling slipping to around $1.312. Longer-dated bonds are also under strain, and the pound has reached fresh two-year lows against the euro. These moves follow reports that the Chancellor is now reconsidering her plan to raise headline income-tax rates, alongside doubts over an exit tax and other revenue measures needed to bridge a fiscal gap estimated at up to £35 billion."
"This is exactly how credibility shocks begin. Gilts are sliding, borrowing costs are climbing, and sterling is weakening because markets fear the government is improvising. There's nothing investors hate more than indecision disguised as strategy."
"The reaction is unmistakable. Bond traders are telling the Treasury that they will not tolerate mixed signals. They saw what happened during the Truss turmoil and they'll not wait politely for clarity. They're pricing risk in real time."
Gilts, broader bond markets and the pound have moved sharply as investors respond to growing Budget uncertainty. Ten-year gilt yields climbed toward 4.54% while sterling fell to about $1.312 and hit two-year lows versus the euro; longer-dated bonds are under pressure. Reports say the Chancellor is reconsidering plans to raise headline income-tax rates and that doubts persist over an exit tax and other revenue measures to close a fiscal gap of up to £35 billion. Market participants are pricing increased risk, drawing parallels with the volatility seen during the Truss mini-budget episode and signalling heightened concern over government credibility.
Read at London Business News | Londonlovesbusiness.com
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