Bond in sterline ne abbiamo?

[Massimo Odiot]

La premessa da fare e' che la Bank of England e' indipendente dal governo britannico. Purtroppo, dato che l'attuale governo e' composto da buffoni - e il mercato attualmente prezza UK come piu' a rischio ad esempio dell'Italia (il che e' tutto dire) - la Bank of England si e' trovata costretta ad intervenire, mettendo la pezza degli acquisti temporanei di gilts...

Finalmente, il governo comincia a prendere atto che il mini-budget e' una schifezza... Quindi e' sempre piu' probabile che cambino ulteriormente il mini-budget, hanno tempo fino al 31 ottobre, quando ci sara' la presentazione ufficiale... Il mercato e le quotazioni dei gilts sarebbero influenzate positivamente da eventuali miglioramenti... Vedo pero' un ritraccio, quindi penso che oggi pomeriggio si scenda perche' i dati dell'inflazione usa condizionan tutto e tutti...

 

[Massimo Odiot]

https://www.theguardian.com/commentisfree/2022/oct/13/bank-of-england-competence-mini-budget

The Bank of England is selling off its most valuable asset: the perception of competence
Duncan Weldon

It was the government that started this fire – but the Bank is proving to be a poor firefighter

For all the attention grabbed by sterling’s wild gyrations in the three weeks since the chancellor’s mini-budget, the real action has been in the market for British government bonds, known as gilts. The pound going up or down a few percentage points does matter: a weaker pound increases the cost of imported goods such as energy and food, and feeds through into inflation and living standards. But those impacts pale into insignificance compared with the pain that can be delivered by the gilts market.

Over the last month, the price moves in this market have, in the usually cautious words of the Bank of England, raised a “material risk” of a breakdown in financial stability, coming close to a “fire sale dynamic”. The interest rate, or yield, on British government borrowing has shot up with almost unprecedented speed. The move in September was the largest monthly increase in any major economy since at least 1987. That was enough to force the Bank to intervene in an attempt to restore a sense of orderliness in an operation that is due to end on Friday 14 October.

The immediate consequence has been mortgage rates on new loans jumping to their highest level in more than a decade and half. As mortgages reset from lower priced, fixed-rate deals, consumer spending will take a serious hit. In the longer run, higher yields on gilts will make the cost of servicing Britain’s government debt higher, which means that more of the tax take will be diverted away from spending on public services and towards debt interest payments. It will increase borrowing costs for firms, slowing down their investment and hiring plans.

In short, this is all deeply unpleasant for an economy that already looked to be sliding into recession.

This year was already proving tough for bond markets well before Liz Truss became prime minister. The lingering impacts of the pandemic on supply chains, coupled with a sharp rise in global energy prices following Russia’s invasion of Ukraine, had already pushed inflation to the highest levels seen since the 1980s. To bring inflation down, central banks have been raising interest rates to slow economic demand and to attempt to relieve some price pressures. The Bank of England had raised interest rates from just 0.1% last December to 2.25% on the eve of the mini-budget.

Rising short term interest rates – and expectations that they will rise higher in the future – make government bonds less attractive to investors. Why buy a 10-year gilt with a yield of, say, 2% today if you expect to be able to pick one up with a yield of 3% in a few months’ time? As expectations of interest rates change, so too do bond prices.

Investors reacted to Kwarteng’s plan for growth by dumping gilts. Taken together, the energy price intervention and the £45bn or so of unfunded annual tax cuts would, they assumed, add to economic demand and hence increase price pressures. That would force the Bank to raise interest rates even higher in the future, and that made holding gilts less attractive.

The government may have lit a fire in the gilt market with its sudden shift away from fiscal conservatism, but it turns out that that market was already covered with combustible material. As has become apparent over the past few weeks, many large pension funds operating in the market for longer term government debt had employed a great deal of borrowing and pledged their gilt holdings as collateral for those loans. As prices moved at an unexpectedly quick pace, they found themselves subject to calls to make immediate payments. What followed was a doom loop: falling gilt prices forced some investors to sell gilts to raise cash, putting further downward pressure on prices and risking more selling. This is the fire sale dynamic the Bank stepped in to prevent.

This brings us to the curious, and in some ways unprecedented, situation that Britain’s central bank has found itself in during the past fortnight. Since 28 September the Bank has stood ready to buy gilts each day in order to prevent a dysfunctional market. But it has also insisted that its role as firefighter is a strictly temporary one. Andrew Bailey, the governor, warned on Tuesday evening that pension funds had only three days remaining to get their house in order.

What’s going on in Threadneedle Street? The Bank’s fear is that actions intended to prevent a complete breakdown in the gilt market are perceived to be simply cleaning up the government’s mess. The dread for central banks is to be seen as subject to “fiscal dominance” and reduced to a subservient role supporting the finance ministry. The longer the Bank’s interventions in the gilt market continue, the greater the risk that it is seen as having given up on its job of controlling inflation and instead concentrated on helping the government to meet its funding costs. A loss of credibility on the inflation front could cause inflation to run even higher. If wage-setters, firms and markets believe the Bank will not act to reduce inflation, then they will act accordingly.

Still, despite the Bank’s very vocal insistence that this particular intervention will end on Friday, it is incredible to warn of the risk of a fire sale on Tuesday and yet act as if everything will be sorted by the end of the week. Some form of further Bank support seems likely.

Clarity matters in a crisis, and this week the Bank has sown confusion. Andrew Bailey hit the news wires from Washington on Tuesday night with his “three days left” warning. But the next morning the Financial Times suggested senior bankers had been reassured the intervention would continue. The Bank was reduced to tweeting that Friday was still the intended end date. Looking like a reluctant firefighter might help the Bank, but looking like an incompetent one helps no one. Setting artificial deadlines that are later revised is a self-inflicted wound.

In the final analysis, while the Bank can smooth the edges of the crisis, only a change in fiscal policy from government can address the root causes. The ball is back the chancellor’s court as he prepares his medium-term fiscal plan for Halloween. We’ll have to wait and see who’s spooked this time.

Duncan Weldon is an economist and the author of Two Hundred Years of Muddling Through.

 

[Massimo Odiot]

Buondi'... Io stamattina sono rientrato in apertura sul gilt 2045... L'ho preso a 85.25... Se penso che mercoledi' era sotto 78, mi piange il cuore... Vabbe', c'e' anche da dire che, rispetto a mercoledi', le notizie sono decisamente cambiate, almeno per quanto riguarda il breve periodo... Ribadisco infatti che mi sento solo di fare un'operazione di breve, da chiudere prima del prossimo rialzo dei tassi in data 3 novembre...

https://www.theguardian.com/business/live/2022/oct/14/kwasi-kwarteng-returns-early-imf-markets-price-more-u-turns-business-live?filterKeyEvents=false&page=with:block-634914a68f0868dbfd2de9c8#block-634914a68f0868dbfd2de9c8

16m ago
08.53 BST
Credit Suisse economist: UK recession could be deeper than forecast

Credit Suisse’s head of UK economics, Sonali Punhani, has warned that the UK’s recession could be worse than expected because of the recent market turmoil.

• Owing to the market turmoil that has followed the announcement of the mini-budget, risks are rising that the recession in the UK is deeper than we forecast. If the market moves are sustained or worsened, they can offset the impact of the tax cuts and increase the depth of the recession through much higher mortgage costs and currency-led inflation.

• Real incomes could be squeezed further by 1-1.5% in 2023 if the recent market moves are sustained, which is likely to add downside risks to our growth forecast of -0.2% in 2023.

• For the moves to stabilise, the Bank of England would need to restore credibility by hiking aggressively in the near term. We expect the BoE to hike 100bps in November and raise rates to 4.5% by early 2023.

• More importantly, the markets would need to see a credible fiscal plan on October 31 to reverse these moves, in our view. We calculate that fiscal tightening of 2.5% of GDP (£60bn) in 2026-27 would likely be needed to stabilize the debt to GDP in the medium term. This is possible via a combination of a U-turn on tax cuts (being discussed and look possible) as well as spending cuts. It would be challenging to deliver the scale of these cuts, but for them to be credible, these need to be delivered sooner rather than in the latter part of the forecast.

 

[Massimo Odiot]

12m ago
11.09 BST
Liz Truss to hold surprise press conference today

Downing Street has just announced that Liz Truss will hold a press conference later today. More on our politics live blog with Léonie Chao-Fong.

3m ago
11.18 BST

The press conference will happen at 2pm BST, Reuters reports.

The chancellor, Kwasi Kwarteng, will not be standing next to the prime minister, Liz Truss, when she gives her press conference this afternoon, Sky News is reporting.

Sources have said “it looks as if the deal has been done”.

Che dire, incrociamo le dita e tocchiamo i gioielli di famiglia...

 

[cthulhu]

12m ago
11.09 BST
Liz Truss to hold surprise press conference today

Downing Street has just announced that Liz Truss will hold a press conference later today. More on our politics live blog with Léonie Chao-Fong.

3m ago
11.18 BST

The press conference will happen at 2pm BST, Reuters reports.

The chancellor, Kwasi Kwarteng, will not be standing next to the prime minister, Liz Truss, when she gives her press conference this afternoon, Sky News is reporting.

Sources have said “it looks as if the deal has been done”.

Che dire, incrociamo le dita e tocchiamo i gioielli di famiglia...

che dirà?
retromarcia sulla politica fiscale?

i gilts intanto proseguono spediti

 

[Massimo Odiot]

che dirà?
retromarcia sulla politica fiscale?

i gilts intanto proseguono spediti

Da quello che capisco, Truss potrebbe arrendersi e alzare la corporation tax da 19% a 25% (dopo aver sempre assicurato che non l'avrebbe fatto)... E inoltre potrebbe licenziare quell'incompetente ministro dell'economia Kwuarteng... Praticamente potrebbero finire per ricalcare i piani di manovra finanziaria che stava pensando Sunak... A questo punto, mi chiedo come mai non abbiano preso direttamente Sunak come primo ministro... Vabbe', giochetti politici come al solito...

1m ago
11.45 BST
Market summary

UK government bonds continue their rally, amid expectations that key parts of the mini-budget will be scrapped, and reports that Kwasi Kwarteng will be sacked as chancellor.

It is also the last day of the Bank of England’s emergency bond-buying programme.

The rally has pushed bond yields dramatically lower, reducing the cost of government borrowing. The two-year yield has fallen 17 basis points to 3.67%, the lowest since the day of the mini-budget, and the 10-year bond is yielding 3.96%, down 23 bps.

The 30-year yield has tumbled 31 bps to 4.28% while the 20-year yield has dropped 26 bps to 4.37%. Both surged above 5.1% on Wednesday.

European stock markets have all risen more than 1%, with the FTSE 100 in London is 1.15% higher at 6,928, a gain of 78 points.

The pound has retreated 0.5% to $1.1269.

 

[Massimo Odiot]

Ho fatto un azzardo... Venduto in loss le BEI 2026 1% per passare sul GILT 2045 3.5%... Vediamo come va a finire...

 

[cthulhu]

Ho fatto un azzardo... Venduto in loss le BEI 2026 1% per passare sul GILT 2045 3.5%... Vediamo come va a finire...

non voglio instillarti dubbi ma avrei atteso minimo settimana prossima per vedere senza acquisti BOE se le quotazioni reggono
è il motivo per il quale mi ero prefisso di uscire entro oggi

 

[Massimo Odiot]

Niente da fare, per ora l'azzardo non ha funzionato, anzi... Mi pare chiaro che "il mercato" voglia le dimissioni della Truss... Spero almeno che la BoE utilizzi tutti i 10 miliardi giornalieri per far man bassa di gilts, dato che stanno ritracciando di brutto...

 

[Warren Buffetto]

Da quello che capisco, Truss potrebbe arrendersi e alzare la corporation tax da 19% a 25% (dopo aver sempre assicurato che non l'avrebbe fatto)... E inoltre potrebbe licenziare quell'incompetente ministro dell'economia Kwuarteng... Praticamente potrebbero finire per ricalcare i piani di manovra finanziaria che stava pensando Sunak... A questo punto, mi chiedo come mai non abbiano preso direttamente Sunak come primo ministro... Vabbe', giochetti politici come al solito...

1m ago
11.45 BST
Market summary

UK government bonds continue their rally, amid expectations that key parts of the mini-budget will be scrapped, and reports that Kwasi Kwarteng will be sacked as chancellor.

It is also the last day of the Bank of England’s emergency bond-buying programme.

The rally has pushed bond yields dramatically lower, reducing the cost of government borrowing. The two-year yield has fallen 17 basis points to 3.67%, the lowest since the day of the mini-budget, and the 10-year bond is yielding 3.96%, down 23 bps.

The 30-year yield has tumbled 31 bps to 4.28% while the 20-year yield has dropped 26 bps to 4.37%. Both surged above 5.1% on Wednesday.

European stock markets have all risen more than 1%, with the FTSE 100 in London is 1.15% higher at 6,928, a gain of 78 points.

The pound has retreated 0.5% to $1.1269.

Truss confirms new tax U-turn and insists she will stay as PM - BBC News
https://www.bbc.co.uk/news/live/uk-politics-63221738

Truss says she will reverse her plan to scrap an increase in corporation tax and admits the government's mini-budget had gone "faster and further" than many expected

Che sia maledetta...mi costera' 60k di tasse.....gia' stavo godendo...
Ben inteso il 1 mil di utile e' un one off x operazione sul mercato immobiliare!

 

[Massimo Odiot]

Truss confirms new tax U-turn and insists she will stay as PM - BBC News
https://www.bbc.co.uk/news/live/uk-politics-63221738

Truss says she will reverse her plan to scrap an increase in corporation tax and admits the government's mini-budget had gone "faster and further" than many expected

Che sia maledetta...mi costera' 60k di tasse.....gia' stavo godendo...
Ben inteso il 1 mil di utile e' un one off x operazione sul mercato immobiliare!

Ahahah, ti capisco, fai bene a specificare... Ad una lettura precedente ti stavo gia' immaginando milionario e con super stipendio!!!

 

[Warren Buffetto]

Ahahah, ti capisco, fai bene a specificare... Ad una lettura precedente ti stavo gia' immaginando milionario e con super stipendio!!!

Al momento sono in una chain e non si sa quando si chiude!
Considerando che le banche hanno ritirato gran parte delle offerte di nuovi mutui....

 

[Massimo Odiot]

Al momento sono in una chain e non si sa quando si chiude!
Considerando che le banche hanno ritirato gran parte delle offerte di nuovi mutui....

Azz, in bocca al lupo! Gia' prima della crisi, avevo amici rimasti in ballo oltre un anno con questa storia delle catene... Una coppia di amici si era addirittura vista costretta ad andare in affitto 6 mesi, in attesa che la situazione si sbloccasse...

A febbraio 2022 avevamo negoziato un mutuo ventennale tasso fisso in area 2.5% (a dicembre 2021 avremmo potuto spuntare 1-1.5%, vabbe')... Alla fine lasciammo perdere l'acquisto dell'appartamento, perche' non ci sentivamo sicuri per via della guerra in Ucraina, con inflazione e costi energetici in aumento... Ora credo che ci offrirebbero un 6%?!?* Non oso immaginare cosa succedera', con i prossimi aumenti di tassi a novembre e dicembre...

C'e' anche da dire che, pensando all'appartamento che avevo addocchiato allora, ora ne sto vedendo di simili (Londra est, zona 2) che hanno abbassato il prezzo del 10%... Vediamo cosa succede ora di meta'-fine 2023...

*EDIT: sono andato a controllare... La loro migliore offerta attualmente e' 5 anni fisso a 5.45%, poi variabile... Sparito il ventennale a tasso fisso, incredibile...

 

[yyvhes]

Mai come in questo periodo questo thread, da me aperto ben 7 anni fa, è di straordinaria attualità.

Occorre seguire attentamente l'evoluzione delle vicende.

Ci possono essere tante opportunità interessanti, specialmente per chi come me non ha il problema del rischio valuta vivendo in UK.

 

[Massimo Odiot]

Mai come in questo periodo questo thread, da me aperto ben 7 anni fa, è di straordinaria attualità.

Occorre seguire attentamente l'evoluzione delle vicende.

Ci possono essere tante opportunità interessanti, specialmente per chi come me non ha il problema del rischio valuta vivendo in UK.

Buondi'! Allora e' doveroso da parte un grande grazie - seppur in ritardo - per la tua ottima idea di aver aperto questa discussione!
Io vivo in UK da molti anni, ma solo nel 2022 ho cominciato ad interessarmi di obbligazioni in GBP... Piu' che altro perche', fino a poco tempo fa, le quotazioni erano altissime e i rendimenti da fame! Assurdo come la situazione sia radicalmente cambiata negli ultimi mesi...

Ora spero solo che la sterlina e soprattutto i gilts ritrovino un po' di stabilita'... Anche se, dall'aria che tira, mi aspetto delle elezioni nel giro di qualche mese...
Di sicuro, ad inizio novembre ci aspetta un aumento dei tassi nel range 0.75-1.00...

 

[Massimo Odiot]

Dai che forse l'abbiamo scampata, almeno per il momento... Io attualmente ho azzerrato tutto il loss accumulato con il mio malsano azzardo di venerdi' mattina... Qualcuno di voi e' entrato venerdi' pomeriggio e ora si sta godendo il gain?

https://www.theguardian.com/business/live/2022/oct/17/pound-jeremy-hunt-tax-spending-bond-yields-bank-of-england-business-live?page=with:block-634d32ea8f08c0284e6d5006#block-634d32ea8f08c0284e6d5006
11.55 BST
Those ditched tax cuts in full

Here’s the full details of the tax cuts which have been abandoned by chancellor Jeremy Hunt, as he tries to preserve economic stability and show the markets Britain is committed to fiscal discipline.

Cutting the basic rate of income tax to 19% from April 2023. While the government aims to proceed with the cut in due course, this will only take place when economic conditions allow for it and a change is affordable. The basic rate of income tax will therefore remain at 20% indefinitely. This is worth around £6 billion a year.

Cutting dividends tax by 1.25 percentage points from April 2023. The 1.25 percentage points increase, which took effect in April 2022, will now remain in place. This is valued at around £1 billion a year.

Repealing the 2017 and 2021 reforms to the off-payroll working rules (also known as IR35) from April 2023. The reforms will now remain in place. This will cut the cost of the government’s Growth Plan by around £2 billion a year.

Introducing a new VAT-free shopping scheme for non-UK visitors to Great Britain. Not proceeding with this scheme is worth around £2 billion a year.

Freezing alcohol duty rates from 1 February 2023 for a year. Not proceeding with the freeze is worth approximately £600 million a year. The next steps of the Alcohol Duty Review announced in Growth Plan 2022 will continue as planned. The alcohol duty uprating decision and interactions with the wider reforms to alcohol duties under the Alcohol Duty Review will be considered in due course.

This is on top of abandoning the abolition of the top rate of income tax, and proceeding with the increase in the corporation tax rate.

Updated at 11.56 BST

 

[gardener]

E' risalito tutto o è rimasto qualcosa di appetibile ?

 

[Massimo Odiot]

Per ora sembra che stia recuperando piu' la sterlina che i gilts... Diciamo che siamo tornati ai valori di venerdi' mattina... Ma per ritornare a valori "pre-settembrini" penso che ce ne voglia ancora... Anche perche' il 3 novembre la BoE alzera' per bene i tassi...

 

[Massimo Odiot]

https://www.telegraph.co.uk/business/2022/10/18/ftse-100-markets-live-news-pensions-windfall-tax-pound/

Live
Pound nears two-week high as Bank of England signals it will delay bond sales - live updates

Good morning.

The pound neared a two week high after reports that the Bank of England will delay its plans to sell off gilts in a process known as quantitative tightening that will reduce the amount of money flowing around the financial system. Sterling went to highs of $1.1410 against the dollar, after the Financial Times broke the story on Tuesday morning.

The Bank of England will delay selling billions of pounds of government bonds until markets are calmer. The FT reported that Bank officials have made the decision after assessing markets as being “very distressed”.

Meglio tardi che mai

 

[cthulhu]

https://www.finanzaonline.com/notiz...rnano-i-sell-su-sterlina-e-titoli-di-stato-uk

soliti pajass