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.
Today’s UK Spending Review is Chancellor Rachel Reeves opportunity to overcome the largely unwarranted negativity around her, and seize control of the narrative to demonstrate financial, economic and political competency – vital to keeping the bond market open and receptive.
The stunning success of yesterday’s 14x covered 2040 Gilt confirms the new Labour Government has a wider range of options for the October Budget. It nails the lies fictitious “Bond Vigilantes” having been pouring in the market’s ear – the fact is the global bond market has just demonstrated confidence in Sir Kier Starmer and Rachel Reeves.
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