On a scale of 1 to 10, we're Fcked!

[willendure]

On the contrary, Treasuries are roughly the level they were at the start of the week, not so for Gilts, which are much higher.

Fair enough. But zoom out to the 1 month chart, and both have risen 40 basis points, so I am counting that as just noise.

Friend of mine applying for a mortgage at the moment, and was surprised when I told him not to expect a better rate even if the BofE puts rates down at the next meeting. Seems like short terms rates are going down, but longer ones are going up, and that is the globally synchronized picture.

[vetran]

[jamesbrown]

Fair enough. But zoom out to the 1 month chart, and both have risen 40 basis points, so I am counting that as just noise.

Friend of mine applying for a mortgage at the moment, and was surprised when I told him not to expect a better rate even if the BofE puts rates down at the next meeting. Seems like short terms rates are going down, but longer ones are going up, and that is the globally synchronized picture.

There is noise, but the signal coming through is pretty clear. There have been countless articles on this in the FT and elsewhere in recent days and you need to listen to what bond investors are saying, as much as reading the charts. They are saying that the UK has a new risk premium for the fundamental reasons I mentioned above, excess borrowing, trivial headroom and anemic growth. All these fundamentals add up to the risk premium being described. Again, we're not in lettuce territory, but the additional risk is difficult to dispute.

[jamesbrown]

It just happens that the US faces some significant and accelerating risks at present too like, er, a massive trade war and a massive budget deficit

[sadkingbilly]

usual tory redneck sh1te

typical

[willendure]

There is noise, but the signal coming through is pretty clear. There have been countless articles on this in the FT and elsewhere in recent days and you need to listen to what bond investors are saying, as much as reading the charts. They are saying that the UK has a new risk premium for the fundamental reasons I mentioned above, excess borrowing, trivial headroom and anemic growth. All these fundamentals add up to the risk premium being described. Again, we're not in lettuce territory, but the additional risk is difficult to dispute.

For sure - but bond investors are saying the same thing about the USA, and most developed economies.

I think rewriting the rules to be able to borrow more is a con. Debt is still debt, no matter how you hide it. Last Labour government gave us PFI for off balance sheet spending, and that was not a good thing long term.

Major tulip show incoming I think - that is why bonds are going up. There is too much debt and the rug is going to get pulled on long term bond holders as there is no real alternative to dealing with all this debt except to inflate it away. I certainly would not buy a bond over 2 years in duration today.

This means a severe shortage of funding for any kind of longer term investing, even though the short term rates are going down. What do you think? Back to QE at some point next year?

[jamesbrown]

Useful graphic of the UK risk premium here, gilts baselined to our competitors and shown against the lettuce and post-2006 statistics.