Gilts Gone? October 14

[qldfrog]

PM Truss has resigned!

Central bank wins

Is any one winning?
No so sure.there is no way out:
Either hyperinflation,or abject poverty with a cataclysmic depression.
Even that last point: how the hell can any western country pay its debt or at least interests with IR in the 2 digits which is needed to avoid the first outcome ?
only one way, no more new debt at all and with IR at level of inflation or above...will not happen so another race to the cliff.
Will the pound be the first fiat to collapse?

 

[divs4ever]

PM Truss has resigned!

Central bank wins

briefly , the Central Bank needs a trustworthy salesperson ( WHOOPS !! PM/Chancellor ) good luck with that in England ( and Wales )
because Scotland and Northern Ireland are moving towards the exit already

 

[divs4ever]

Is any one winning?
No so sure.there is no way out:
Either hyperinflation,or abject poverty with a cataclysmic depression.
Even that last point: how the hell can any western country pay its debt or at least interests with IR in the 2 digits which is needed to avoid the first outcome ?
only one way, no more new debt at all and with IR at level of inflation or above...will not happen so another race to the cliff.
Will the pound be the first fiat to collapse?

all looks fine and comfy at those Davos conferences ( and that is all the elite club care about although maybe the fuel costs of their private jets might be irritating )

they obviously have no intention of repaying the original value borrowed( created ) they plan is to inflate the debt to zero ( and or 'soft default ' the capital )

first fiat to collapse , NO, fiat currencies have collapsed before ( and will collapse in the future in due course )

currencies rely on trust , if you don't trust in it's value , you won't use it as a trading tool/system

 

[qldfrog]

all looks fine and comfy at those Davos conferences ( and that is all the elite club care about although maybe the fuel costs of their private jets might be irritating )

they obviously have no intention of repaying the original value borrowed( created ) they plan is to inflate the debt to zero ( and or 'soft default ' the capital )

first fiat to collapse , NO, fiat currencies have collapsed before ( and will collapse in the future in due course )

currencies rely on trust , if you don't trust in it's value , you won't use it as a trading tool/system

I meant first in the coming cascade....

 

[divs4ever]

I meant first in the coming cascade....

would we know ?? if a middle-weight currency collapsed ( that wasn't part of a planned regime-change agenda )

sure we would hear about Russia , North Korea , Vietnam , etc etc in a heartbeat , big headlines and special talk spots , but what if the collapse happened in Canada , or the EU , ( ESPECIALLY if it was a G7 member ) , they can no longer even tell the truth about a simple recession , would you trust them on the currency collapse proclamation

 

[Dona Ferentes]

the Brits have backed themselves into an uncomfortable situation
Disfunctional? Not yet, but polarised and a bifurcating society, in the view of many

NATIONAL PRESS CLUB ADDRESS LORD JONATHAN SUMPTION ; 10 OCTOBER 2022 ... is a good read

Lord Jonathan Sumption

Lord Jonathan Sumption, Former Justice of the UK Supreme Court and Author, will Address the National Press Club of Australia on 'What is going on in the United Kingdom?'.

www.npc.org.au

 

[divs4ever]

the Brits have backed themselves into an uncomfortable situation
Disfunctional? Not yet, but polarised and a bifurcating society, in the view of many

NATIONAL PRESS CLUB ADDRESS LORD JONATHAN SUMPTION ; 10 OCTOBER 2022 ... is a good read

Lord Jonathan Sumption

Lord Jonathan Sumption, Former Justice of the UK Supreme Court and Author, will Address the National Press Club of Australia on 'What is going on in the United Kingdom?'.

www.npc.org.au

if it was only the UK or say Japan things might be tough but OK but i suspect there are other Treasuries/Central Banks trying to break the news gently as well , what if several sovereigns come out with variations of ( soft and hard ) defaults

 

[divs4ever]

what was that old quote about seeing one cockroach ??

that might apply currently

 

[Knobby22]

It appears leaving the EU is not working out. The financial sector was a big part of their economy and that is moving to France.
And trade barriers hurt existing and new business.

 

[divs4ever]

It appears leaving the EU is not working out. The financial sector was a big part of their economy and that is moving to France.
And trade barriers hurt existing and new business.

will be interesting to see if any part of the EU ( or UK ) is particularly attractive to the financial sector , now sanctions-addiction has taken hold there , given Asia has a huge potential for future growth would Singapore seize the opportunity , and leap-frog several rivals ( i can't see BIG money accepting Hong-Kong , Macau , or Taiwan or even Thailand as their new base )

leaving the EU ( imo ) was the only hope the UK had of surviving what is coming globally ( considering they still had their own currency ) it was a tiny hope , comprehensively squandered , and now the United Kingdom looks like it is on the verge of breaking up , Scotland will vote on independence soon , and only vote-rigging will stop Ireland from unification in the foreseeable future ( there is no leadership left in England for the Loyalists to rally around )

 

[Dona Ferentes]

It's all going swimmingly. New PM Sunak sworn in, spoils of office divided amongst the factions .

Importantly, 10 year Gilts are down 12 pts, with a yield of 3.62%.

For comparison, 10-year yield in US is 4.09% ; Australia 4.07% ; Germany 2.16%.

 

[waterbottle]

I wonder if the 10 yr US bonds will experience the same drop in yields following midterms?

 

[divs4ever]

I wonder if the 10 yr US bonds will experience the same drop in yields following midterms?

depends on who will be buying those Treasuries after the mid-terms , the yield might be anything the Fed decides ( because they will be buying most of them )

 

[waterbottle]

depends on who will be buying those Treasuries after the mid-terms , the yield might be anything the Fed decides ( because they will be buying most of them )

I vaguely remember that yield curve controls were debated and dismissed by the Fed during the height of the covid pandemic.

 

[divs4ever]

last i heard the BoJ is still 'shaping the yield curve '

the other problem is monetary activities sometimes become less transparent ( or are reported in a less timely manner )

some think the Fed is doing the same , in an effort to un-invert the yield curve

probably the best way for the Fed to normalize the yield curve , would be to reduce government spending ( and borrowing ) , but what are the chances of that ( assuming the Populists fail to grab control of the Congress or Senate )

 

[Dona Ferentes]

this will probably only create problems 'down the road', but things are settling now:

UK’s net bond sales are set to be the highest in history for the coming fiscal year, according to Robert Stheeman, chief executive of the Debt Management Office. He was speaking to Parliament’s treasury committee after last month’s mini-budget sparked turmoil across markets.

With the government having since backtracked on plans for borrowing-fuelled tax cuts, the risk premium on UK bonds has now largely reversed and market confidence has improved, Stheeman said. Still, the environment remains challenging, and it’s important the UK bond market is not viewed as an outlier, he said.

The yield on the UK 10-year note slipped 5 basis points to 3.57 per cent on Wednesday.