Warning signs in the bond market
12 January 2024
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Economics
In the Media
Housing and Planning
Julian Jessop writes in The Spectator
IEA Economics Fellow Julian Jessop has written for The Spectator discussing BlackRock’s UK chief investment strategist Vivek Paul’s warning that radical tax cuts or spending increases could once again unsettle the market for UK government debt.
Julian wrote:
“These warnings should not be dismissed lightly. BlackRock is a huge global player, with more assets under management than any other firm.
“There are also some reasons to think the market in UK government bonds, or ‘gilts’, might be particularly vulnerable to a buyers’ strike. For a start, the market for gilts is small compared to those for US treasuries or Japanese government bonds (JGBs), or the pool of bonds issued by governments in the euro area.
“However, a sense of perspective is needed. Let us deal first with the points about Trussonomics.
“History is usually written by the victors, and it may be hard to convince many people that the policies of Truss and Kwarteng were the right ones, just badly timed and badly communicated.
“The fallout was also exacerbated by heightened nervousness in global bond markets at a time when inflation was surging and other central banks were expected to continue raising rates aggressively. The global backdrop now is very different.”
Read Julian’s full piece here.
Julian wrote:
“These warnings should not be dismissed lightly. BlackRock is a huge global player, with more assets under management than any other firm.
“There are also some reasons to think the market in UK government bonds, or ‘gilts’, might be particularly vulnerable to a buyers’ strike. For a start, the market for gilts is small compared to those for US treasuries or Japanese government bonds (JGBs), or the pool of bonds issued by governments in the euro area.
“However, a sense of perspective is needed. Let us deal first with the points about Trussonomics.
“History is usually written by the victors, and it may be hard to convince many people that the policies of Truss and Kwarteng were the right ones, just badly timed and badly communicated.
“The fallout was also exacerbated by heightened nervousness in global bond markets at a time when inflation was surging and other central banks were expected to continue raising rates aggressively. The global backdrop now is very different.”
Read Julian’s full piece here.
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