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UK bond yields skyrocket as investors anticipate rising interest rates.China’s growth slows – business is alive | work

UK short-term borrowing costs soared to their highest levels in almost two and a half years as the prices of UK interest rate cities rose quickly.

The two-year gilt yield, or interest rate, jumped to its highest level since May 2019 this morning.

Two-year gilt yields reached 0.75% from just 0.57% on Friday night.

The rise in gilt yields shows that traders expect UK interest rates to rise soon to combat inflation.


Two-Year Gilt Yield Photo: Refinitiv

Yields on 10-year bonds have also risen (1.1% to 1.15%), approaching the two-and-a-half-year highs seen last week.

The movement comes after the governor Bank of England He warned that he “must act” to curb inflation and sent a new signal that he was preparing to raise interest rates.

Andrew Bailey continues to believe that the recent surge in inflation is temporary, but predicted that rising energy prices would push it up, prolong the rise and increase the risk of rising inflation expectations. ..

“Monetary policy cannot solve supply-side problems, but it must and must act, especially if there are risks to medium-term inflation and expectations of medium-term inflation,” Bailey said on Sunday. Said.

In an online panel discussion hosted by a group of 30 advisory groups, Bailey explained:


“And that’s why we signaled the Bank of England. This is another such signal we must act on.

But of course, that action comes at our monetary policy conference. “

The World Bank will hold two more MPC meetings this year, November 4th and December 16th.

The World Bank recently predicted that inflation would be more than 4% early next year, or more than double the target of 2%. Soaring energy prices are increasing inflationary pressure and raising expectations for rising interest rates.

Jeremy Thomson-Cook, Chief Economist, International Business Payment Specialist Equal to money, Investors are now pointing out that they are setting prices with some rate hikes by the end of next year.

… although Britain’s growth isn’t exactly shining.


Bailey’s comments are unlikely to boost the pound sterling, as the market has already fully priced 0.15% this year and three more rate hikes next year, raising the base interest rate to 1%. [the pound] Significantly expensive.

But despite the bright rhetoric, the Johnson administration faces unfortunate facts. The UK economy is not growing as fast as they want. August GDP figures rose only 0.4%. This means that third-quarter growth is likely to be only half of the Bank of England’s 3% forecast. The economy is still 5% smaller than it would have been if it had continued to grow on its pre-pandemic trajectory from 2010 to 2019. In contrast, the United States achieved this by the second quarter of 2021.

UK bond yields skyrocket as investors anticipate rising interest rates.China’s growth slows – business is alive | work

Source link UK bond yields skyrocket as investors anticipate rising interest rates.China’s growth slows – business is alive | work

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