"UK bond markets took fright on Friday after it emerged that Rachel Reeves had ditched plans for a manifesto-busting increase in income tax at this month's autumn budget. On a day of choppy trading in the City, the cost of UK government borrowing rose by the most in a single day since early July, when a tearful appearance by Reeves in parliament spooked investors."
"The yield in effect the interest rate on 10-year government bonds, which are known as gilts, jumped by more than 0.13 percentage points to trade at about 4.575%, the highest level in a month. The pound also sold off against the US dollar on the foreign exchange markets, dropping by about 0.3% to trade at $1.3155, reflecting mounting investor unease over the chancellor's make-or-break budget in less than two weeks' time."
Rachel Reeves abandoned plans for an increase in income tax at the forthcoming autumn budget, prompting sharp market reactions. The yield on 10-year gilts jumped by more than 0.13 percentage points to about 4.575%, the highest in a month. The pound fell roughly 0.3% to $1.3155, and the FTSE 100 closed down more than 1% at 9,698 amid wider global market sell-offs. Investors had earlier grown comfortable after signals that manifesto commitments might be breached to plug a potential £30bn fiscal shortfall. The late U-turn followed bitter infighting and threats of a backbench rebellion. Analysts warned the reversal raises perceived risks of Labour leadership change.
Read at www.theguardian.com
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