UK government borrowing costs hover near a 16-year high
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British government borrowing costs edged higher on Friday but remained below Thursday’s peak as investors awaited a key US jobs report later in the day.
The 10-year gold-plated yield increased 0.01 percentage point to 4.82% but was much lower than Thursday’s 4.93%, which was the highest level. highest level since 2008. Yields move inversely to prices.
The British pound, on Thursday, fell 0.5%reversed initial losses to rise 0.1% to $1,231.
Sows have been affected in recent sessions amid rising government bond yields globally due to persistent inflation in several major economies.
Gordon Shannon, portfolio manager at TwentyFour Asset Management, said Friday’s jobs data will be “important in keeping markets calm”.
In the long term, gilded market He added: “Reeves needs to show an understanding of the tougher global backdrop by cutting spending, while we wait for sterling to fall to make sows attractive enough to international buyers. international”.
The UK has been hit particularly hard by the global bond sell-off as investors worry about the government’s need for massive debt and the growing threat of stagflation, combining weak growth with persistent price pressure.
The credibility of the government’s economic plans is vulnerable to tensions in the bond market after chancellor Rachel Reeves left herself with just a £9.9bn gap over fiscal rules her amendments in last fall’s Budget.
How Reeves addresses the lack of financing headroom will be key, said Pooja Kumra, UK rates strategist at TD Securities.
“Investors are asking what will be the prime minister’s next choice. . . cut spending, borrow more or raise taxes,” she said.
Economists estimate that the sow sell-off has effectively wiped out Reeves’ ability to manage his budget. The level of bond yields is an important determinant of the budget surplus, given its significance for the government’s interest bill, which exceeds £100 billion a year.
Labor sought to reassure investors this week, with Darren Jones, the number two at the UK Treasury, told parliamentarians on Thursday that the government was committed to “economic stability and sound public finances.”
