Damn the torpedoes! Full steam ahead. The recent 10-year Gilt auction was a screaming success. There is plenty of demand at the right yield – 5% for 10 years! The cost of servicing debt is high, but to create growth the government needs to fix the economy by borrowing more. Global investors know that when assessing the UK’s yield premium. The UK would do better to borrow more rather than less!

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 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.

Bond markets reflect facts. Equities are about stories. There is a shift in markets underway – where are rates, inflation and politics taking us? Traders want to see certainty – and that will be reflected in bond rates.

The global economy is reaching a nexus point as multiple cycles and challenges coincide – successful nations will recognise and exploit the new opportunities as they emerge. In the UK, it’s time for the new Labour government to stop trying to be marginally better tories than the Tories were, and embrace debt solutions!

Inflation is increasing the burden of the UK’s debt, but it’s been well managed and should not impact as heavily as it might in other highly indebted nations. We can probably afford to spend more – especially in Defence, the primary duty of any state.