Labour declared war on Reform yesterday. Is it a battle they can win? Populism trounced the ill-prepared conventional Democrats in the USA last year. UK Gilts are relatively stable, showing markets are not particularly concerned – yet. Little is known of Reform’s non-immigration or Europe agenda.  Can Labour regain the initiative?

The amount of nonsense being written about the imminent collapse of the UK Gilts Market defies logic and experience. The numbers show demand for Gilts remains solid – but the growing, and often invented negativity over rising Lond-End yields threatens confidence in the UK’s bond market. Yield curves are steepening around the globe!  

The UK’s Torygraph Newspaper excelled itself over the weekend, publishing claims the UK is bust and seeking an IMF bailout. Their readership loved it as proof positive the UK is doomed and how terrible the new government is. It undermined the Gilts market, and raised substantial global investor fears over the investibility of the UK. The story was utterly unfounded.

The scale of the UK’s funding crisis is becoming increasingly apparent. It can be fixed – but needs political sacrifice. “Changing Policy” and backing off promises has costs and consequences. The UK is not in dire peril - it remains a fine, innovative and strong economy, but we need to get real on spending and how its funded.

Chancellor Rachel Reeves should be angry, not tearful. The multiple crises facing the UK’s funding have been long-term in creation. Reeves has the opportunity to fix them. The recipe is simple; common sense, political discipline, a dash for growth and a spicing of Gilts Liability Management. C’mon Rachel… you can do it.

Yesterday the Gilts market suffered a judder moment – but it was political theatre. The gilts market is fundamentally in good shape, well run, and a 3.5 times oversubscribed Gilts auction highlights it’s not under Bond Vigilante pressure. The UK is not about to default, beg an IMF bailout – no matter what Liz Truss apologists would like to believe.

Markets tend towards complacency – especially while there is lots of “stuff” going on… The current noise, much of it Trump generated, is hiding lessons and danger points! How long will markets keep up their positive vibe, blithely ignoring just how much the foundations of the global economy are shifting?

Yesterday’s UK’s 15-year Gilt deal was a 15 times oversubscribed blowout success, demonstrating global investors have confidence in the UK’s competence, stability and markets. However, Ray Dalio is writing another book about why countries go bust, and reckons the UK is caught in a debt-death spiral. I doubt it.

The UK chattering classes are delighted. They’ve finally got something they can all agree on – it’s all Labour’s fault. However, that leaves one itsy-bitzy problem? We all agree this lost are useless. The last lot was even more useless. How and who is actually going to fix the UK? I prescribe a course of pragmatic reality and primal screaming….

Hard Hats to the Ready. Is Elon Musk trying to bring down the UK government by undermining sterling and the Gilts market through lies and disinformation on X? Might sound like conspiracy theory – but that’s what it feels like in the market.