Reply to: UK Finances Fecked

[willendure]

I note that the 30 year has dropped from 5.7% at the start of September to 5.2%, which would imply it's now negatively climbing rapidly. I wonder what other Express-level stories the OP is coming out with?

That was then. This is now.

[WTFH]

I note that the 30 year has dropped from 5.7% at the start of September to 5.2%, which would imply it's now negatively climbing rapidly. I wonder what other Express-level stories the OP is coming out with?

[Protagoras]

It does raise the question of why is the UK 10 year interest rate so high, compared with EU countries? The answer would seem to be that inflation in the UK is higher, but why is that? Is it just down to energy costs?

It looks to me as if inflation for the most part is driven by input cost rises, rather than excessive demand. A good chunk of this is imported.

Energy is certainly a big factor and one over which government has control. The 'market' is impaired by policy related distortions (e.g. subsidies) and market design. It's in government's gift to reform this, but they won't.

Then there's inflation arising simply from labour input costs; increasing employer NI => increased prices and reduced labour demand. Again, a policy cost.

Certain commodities, such as cocoa have had production impacted; whether this justifies the prices we see for chocolate in the shops is another matter.

I also reckon lots of firms are simply 'at it', increasing prices because of their market power, to increase profits. Insurance premiums, for example, have become silly. Maybe there's a lack of effective competition.

[willendure]

It does raise the question of why is the UK 10 year interest rate so high, compared with EU countries? The answer would seem to be that inflation in the UK is higher, but why is that? Is it just down to energy costs?

[malvolio]

So you’re admitting it tripled in 2022, and you thought nothing of that, but now you’re in meltdown because it has gone up by half in the last 2 years. Is your degree in economics from Trump University?

Perhaps ignore the statisiical nonsense and look at the actual annual cost of the borrowing 2022 to 2025 - roughly £55bn in 2022 against £106bn in 2025 (OBR figures quoted). Double in three years...

[WTFH]

She only became PM on 6th Sept 2022, and it was 3.1% already by then! So yeah, you can't pin the 3x on her...

So you’re admitting it tripled in 2022, and you thought nothing of that, but now you’re in meltdown because it has gone up by half in the last 2 years. Is your degree in economics from Trump University?

[malvolio]

Last week”s 10yr Gilt issue was ten time oversubscribed - they were selling £14bn and got orders for £140bn - so we don’t need to worry too much

Yes we do. Of course there is a demand for gilts at 5% or more. It's a no-lose option.

Nor do they care if we go effectively broke. Which is increasingly likely

[Andy2022]

Last week”s 10yr Gilt issue was ten time oversubscribed - they were selling £14bn and got orders for £140bn - so we don’t need to worry too much

[willendure]

Before Truss (Let's say 04/01/22) it was 1.3%
After Truss (December the same year): 3.7%

Going up 3x in a year is not a "blip".
Trashing the economy and the country is not a blip.
There was no attempt to fix it either by the Sunk administration.

She only became PM on 6th Sept 2022, and it was 3.1% already by then! So yeah, you can't pin the 3x on her...

[WTFH]

... the Truss blip ...

Before Truss (Let's say 04/01/22) it was 1.3%
After Truss (December the same year): 3.7%

Going up 3x in a year is not a "blip".
Trashing the economy and the country is not a blip.
There was no attempt to fix it either by the Sunk administration.

[willendure]

It's interesting when you look at the 5 and 10 year ones how big an impact the Truss car crash had. How many years will the country be reeling from the affects of that?
Looking at 7 year or less, the yield is lower than it was back then.

The 10 year has been consistenly higher than the Truss blip since the start of this year. Trending uncomfortably closer to 5%, I would say.

What is the maximum the UK can sustatin given current debt levels? Over 5% will be bad, 6% major crisis. But I think we will be doing QE and yield curve control well before that comes to pass.

[WTFH]

We're only issuing gilts with a 10yr timeline at the moment and there's still plenty of appetite for it so the 30yr timeline isn't that relevant

BoE probably need to stop they QT process and just hold the gilts until maturity and then cancel them as other central banks are doing

According to the FT there's a lot of UK buyers of gilts ATM which is kinda interesting and if you're young enough to enjoy the ride then the 2061 guilt looks interesting

It's interesting when you look at the 5 and 10 year ones how big an impact the Truss car crash had. How many years will the country be reeling from the affects of that?
Looking at 7 year or less, the yield is lower than it was back then.

[Andy2022]

https://www.tradingview.com/symbols/TVC-GB30Y/

UK 30 year gilt is now at a 28 year high and climbing rapidly.

We're only issuing gilts with a 10yr timeline at the moment and there's still plenty of appetite for it so the 30yr timeline isn't that relevant

BoE probably need to stop they QT process and just hold the gilts until maturity and then cancel them as other central banks are doing

According to the FT there's a lot of UK buyers of gilts ATM which is kinda interesting and if you're young enough to enjoy the ride then the 2061 guilt looks interesting

[willendure]

You mean there's a good return for people who invest in gilts. Might get some of the money that's currently in the US coming our way.

I thought you were all for investment and getting good returns, but this seems like you don't like making money.

Gonna buy now are you? As the interest rate goes up the price goes down, so if you think its got a lot further to go up, now is not the time to buy. Its going to cripple UK investment rates, already the lowest in the G7.

Hint: The pound fell 1.2% against the dollar today. Money is not coming in, its running away.

[Protagoras]

I wonder whether this would be a good time to purchase additional Annuity ...