"Since hostilities flared in the Gulf, UK 10-year gilt yields have climbed by roughly three quarters of a percentage point, briefly nudging above 5 per cent, territory not seriously visited since the 2008 financial crisis. Thirty-year yields have hit their highest level since 1998. The moves have outpaced those in the United States and most of Europe, a worrying decoupling for an economy that has long depended on the goodwill of overseas capital."
"This is not a Truss-style detonation. It is something arguably more troubling: a slow, persistent grind higher that is steadily reshaping the cost of borrowing for every business in the land. Jim Reid at Deutsche Bank reminds clients that the UK's structural fragility is the real story. Britain runs a negative net international investment position, foreigners own more of us than we own of them, leaving the country, in his elegant phrase"
UK economic conditions are worsening with heavy growth downgrades, stubborn inflation, high exposure to volatile gas prices, and thin gas storage capacity in Europe. Political stability efforts in Westminster are occurring alongside a more consequential shift in the gilt market. After hostilities in the Gulf, UK 10-year gilt yields rose by about three quarters of a percentage point, briefly exceeding 5%, and 30-year yields reached their highest level since 1998. The yield increases have outpaced those in the United States and most of Europe, indicating a decoupling that raises concerns for an economy reliant on overseas capital. The result is a slow, persistent rise in borrowing costs affecting businesses first.
Read at Business Matters
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