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☆ Morning Bid: Britain's CPI the next frontier
▼ + stars: | 2023-07-19 | by ( ) www.reuters.com time to read: +2 min

A tentative rally in gilts is poised to extend and sterling could probably say goodbye to the strong side of $1.30. Forecasts put Britain's annual CPI falling to 8.2% in June and core holding at 7.1%. New Zealand sounded a warning in the Asia session, with food prices keeping annual headline inflation higher than expected at 6%. Netflix (NFLX.O), Tesla (TSLA.O) and Goldman Sachs (GS.N) report results later in the day. Key developments that could influence markets on Wednesday:Data: British CPI, Euro zone final CPI, U.S. housing startsSpeakers: Bank of England's Dave RamsdenEarnings: Netflix, Tesla, Goldman SachsReporting by Tom Westbrook; Editing by Muralikumar AnantharamanOur Standards: The Thomson Reuters Trust Principles.

Persons: Tom Westbrook, BoE, Goldman Sachs, Morgan Stanley, Bank of England's Dave Ramsden, Muralikumar Organizations: Bank of, Traders, U.S, Netflix, Microsoft, CPI, Bank of England's, Tesla, Thomson Locations: U.S, Canada, gilts, New Zealand, Asia

☆ For markets, BoE communication is bottom of the class
▼ + stars: | 2023-07-17 | by ( Yoruk Bahceli | ) www.reuters.com time to read: +6 min

U.S. Federal Reserve and European Central Bank expectations have meanwhile risen only marginally. For investors, clear communication from central bankers is crucial as they transmit their policy to borrowing costs through markets. The BoE was the first major central bank to start hiking rates. In contrast, they have long bet on more hikes than the BoE's main forecasts have implied are needed to tame inflation, rates futures show. BoE messaging, suggesting a reluctance to hike, has made it "very difficult" to own gilts recently, he said.

Persons: BoE, Toby Melville, Shamik Dhar, Andrew Bailey, Bailey, Schroders, Azad Zangana, Zangana, Liz Truss, Myles Bradshaw, Chris Jeffery, Jerome, Powell, Christine, Lagarde, it's, Craig, Yoruk, Dhara Ranasinghe, William Schomberg, John Stonestreet Organizations: Bank of England, REUTERS, Fed, ECB, of England, Traders, . Federal Reserve, European Central Bank, BNY Mellon Investment Management, Bank of England's, Investors, Graphics, of England's, Reuters, Asset Management, Thomson Locations: London, Britain, U.S, Dhar

☆ European shares inch lower ahead of US jobs report
▼ + stars: | 2023-07-07 | by ( ) www.reuters.com time to read: +1 min

July 7 (Reuters) - European shares edged lower on Friday, following sharp losses in the previous session, after U.S. data that showed a still strong labor market, while investors await a key U.S. jobs report due later in the day for more clues on interest rate outlook. The pan-European STOXX 600 index (.STOXX) fell 0.4% by 0710 GMT, set for its worst week since mid-March, led by declines in utilities shares (.SX6P), which slid 1.2%. European equities took a hit on Thursday after private payrolls in the United States surged far more than expected in June, suggesting the labor market remained solid despite growing risks of a recession. Investors will be hawkeyed on the American non-farm payrolls report, due at 8:30 a.m. The report is expected to show a drop in number of jobs created in the U.S. in June compared to a month earlier.

Persons: Matteo Allievi, Shubham Batra, Janane Organizations: Shell, Thomson Locations: U.S, United States, Gdansk, Bangalore

☆ Morning Bid: Data-hit bond markets end summer lull
▼ + stars: | 2023-07-07 | by ( ) www.reuters.com time to read: +4 min

On top of that, there were signs that activity at dominant U.S. service sector firms picked up steam again last month too. Friday's release of the Labor Department's monthly national payrolls report will seal the picture. U.S. Treasury yields hit 16-year highs above 5%, German equivalents hit their highest in 15 years and British gilt yields scaled 2008 peaks. The VIX (.VIX) gauge of implied Wall St volatility - which had been peculiarly subdued right through last month - jumped to its highest since June 1. Crucially, 2-year Treasury yields edged back below 5%.

Persons: Mike Dolan, Lorie Logan, payrolls, HSI, Janet Yellen's, Elon, Lorrie Logan, Christine Lagarde, Joachim Nagel, Bank of England policymaker Catherine Mann, Emelia Sithole Organizations: readouts, Federal, Labor, Dallas Fed, Fed, Treasury, Nikkei, Twitter, Meta, Dallas Federal, Central Bank, Bank of England, NATO, Vilnius Reuters Graphics, Reuters Graphics Reuters, PMI Reuters Graphics Reuters, Thomson, Reuters Locations: U.S, China, Canada, New York, Vilnius Reuters

LONDON, July 7 (Reuters) - Unsure which way the cookie crumbles from here - investors are being tempted to drop the bond. The broadest measures of government and corporate bonds have just stuck in mud. Two-year government bond yields are soaring. With June U.S. jobs growth going up yet another gear, U.S. Treasury yields hit 16-year highs above 5%, German equivalents hit their highest in 15 years and British gilt yields scaled 2008 peaks. For all but longer-term pension and insurance funds or banks, bonds may be neither fish nor fowl for a while to come.

Persons: hasn't, Stocks, midyear underperformance, Mike Dolan, Josie Kao Organizations: Global, Bloomberg U.S, Treasury, Bank of, JPMorgan, Europe, Reuters, Twitter, Thomson

☆ Morning Bid: Markets labor on China, three jobs gauges
▼ + stars: | 2023-07-06 | by ( ) www.reuters.com time to read: +4 min

A look at the day ahead in U.S. and global markets from Mike DolanWorld markets have taken a hit from a deepening selloff in China as they await critical health checks on U.S. employment over the next two days. Although Fed futures pricing for the year ahead changed little overnight, two-year U.S. Treasury yields edged up closer to 5%. ADP's June take on private sector payrolls, the latest weekly jobless claims numbers and details of May job openings all hit the slate later. Consensus forecasts have ADP reporting another 228,000 jobs last month, jobless claims ticking higher last week and vacancies falling in May. Events to watch for later on Thursday:* U.S. June ADP private sector jobs report, weekly jobless claims and May JOLTS job openings data.

Persons: Mike Dolan, Janet Yellen, Goldman Sachs, restating, John Williams, Elon Musk, Lorrie Logan, Elaine Organizations: U.S, Treasury, Goldman, Federal, New York Fed, Labor Department's, Dallas Federal, Reuters Graphics Reuters, Reuters, Thomson Locations: U.S, China, Beijing, Hong Kong, Shanghai, Tokyo, Seoul, British, Europe

☆ UK sells government bond with highest yield since 2007
▼ + stars: | 2023-07-05 | by ( David Milliken | ) www.reuters.com time to read: +2 min

LONDON, July 5 (Reuters) - Britain sold a government bond at auction on Wednesday that will pay investors an annual return of 5.668% - the highest yield of any gilt sold since 2007, as markets demand extra returns in anticipation of further Bank of England rate rises. The last time the average yield at a gilt auction was higher was in June 2007, when 2.5 billion pounds of five-year gilts sold at an average yield of 5.790%. Before that, the highest yield was in September 1999 when 2.7 billion pounds of 10-year gilts were sold at an average yield of 5.694%. When the October 2025 gilt was sold at auction last month the yield was 4.874%, and at its launch in January it paid investors a yield of 3.634%. Bond strategists at NatWest last week described it as "one of the cheapest bonds on the UK fitted curve".

Persons: BoE, Andrew Bailey, gilts, David Milliken, Toby Chopra Organizations: Bank of, United, Debt Management, NatWest, Thomson Locations: Britain

☆ Analysis: Bond markets reckon a central bank policy error is on the cards
▼ + stars: | 2023-07-03 | by ( Yoruk Bahceli | ) www.reuters.com time to read: +6 min

"We are positioned for a very big bond rally, and we think that risky assets are completely underestimating the risk of a recession or something nasty happening," he added. (.MERW0G1)An early sign that the bond outlook is improving came last week with data showing euro zone business growth stalled in June. In response, German bond yields, which move inversely to prices, posted their second biggest daily drop since March. But highlighting how hard economic data has become to read, higher-than-expected U.S. first quarter growth and German inflation sent yields surging on Thursday. Major central banks fighting a surge in inflation have collectively raised borrowing costs by over 3,750 bps since September 2021.

Persons: Jason Reed, Mike Riddell, Viraj Patel, Vanda's Patel, BoE, Urban, Jill Hirzel, Dhara Ranasinghe, Harry Robertson, Catherine Evans Organizations: U.S . Federal, REUTERS, Bond, U.S, Federal Reserve, European Central Bank, Bank of England, Reuters, Allianz Global Investors, Vanda Research, Deutsche Bank, General Investment Management, Insight Investment, Thomson Locations: Washington, hawkish, Canada, Britain, Norway, Sintra, Germany, United States, U.S

FALLING STARWhen Odey set up Odey Asset Management, it was in the afterglow of then British Prime Minister Margaret Thatcher's deregulation of the stock market in London's 1986 "Big Bang". Privately educated at the elite Harrow school, Odey left Oxford University and began his career in traditional asset management before launching Odey Asset Management. But fund performance at Odey Asset Management has been a rollercoaster, with Odey renowned for taking risks. He liked to say leverage was like a drug - once you experienced it, you could never live without it, one hedge fund manager said. Lawmakers on Britain's Treasury Select Committee have written to the FCA to question the regulator's supervision of Odey Asset Management and Odey.

Persons: Crispin Odey, Odey, Banks, Robert Sears, CIOs, Don Steinbrugge, Margaret Thatcher's, Egerton Capital, Marshall Wace, Winton, Kwasi Kwarteng, Maiya Keidan, Nell Mackenzie, Iain Withers, Lawrence White, Dhara Ranasinghe, Elisa Martinuzzi, Alex Richardson Organizations: TORONTO, Reuters, Odey Asset Management, FT, Tortoise Media, Odey, Management, Britain's Financial, Authority, Generation Partners, Odey's, HSBC, Inc, Wall Street, Agecroft Partners, British, Harrow, Oxford University, Conservative Party, Barclays, Peugeot, Hong Kong, Lawmakers, FCA, Thomson Locations: LONDON, City, London, Toronto

☆ Bank of England surprises with 50 basis point rate hike to tackle persistent inflation
▼ + stars: | 2023-06-22 | by ( Elliot Smith | ) www.cnbc.com time to read: +3 min

A passageway near the Bank of England (BOE) in the City of London, U.K., on Thursday, March 18, 2021. Hollie Adams | Bloomberg | Getty ImagesLONDON — The Bank of England on Thursday surprised markets with a 50 basis point hike to interest rates, its 13th consecutive increase as policymakers grapple with persistently high inflation. The Monetary Policy Committee voted 7-2 in favor of the half percentage point increase, which takes the bank's base rate to 5%. The move defied market expectations, which had priced in around a 60% chance of a 25 basis point hike. The MPC said that the high number of fixed-rate mortgages means that the full impact of the increase in the Bank Rate so far "will not be felt for some time."

Persons: BOE, Hollie Adams, Sterling, —, we've, Andrew Bailey, Joseph Little, Little Organizations: Bank of England, City of, Bloomberg, Getty, Monetary, MPC, Bank, HSBC Asset Management Locations: City, City of London

☆ VIEW Bank of England delivers hefty rate hike
▼ + stars: | 2023-06-22 | by ( ) www.reuters.com time to read: +6 min

Traders scrambled to price in a peak to UK rates of as much 6% and its implications for the risk of recession, and rate-sensitive stocks like banks and homebuilders slid. MONEY MARKETS: UK 2-year gilts dropped sharply, then rose after the decision but were last unchanged at 5.04%. But even if the bank hasn't offered up any new guidance, the rate decision itself is revealing. The UK has the unenviable title of highest core inflation rate in the G7, and by quite some margin. "Having said that, their policy is now more data dependent, the bank had to deliver a rate increase.

Persons: homebuilders, Sterling, gilts, JAMIE NIVEN, JAMES SMITH, hasn’t, hasn't, BoE, SEEMA SHAH, CHRIS BEAUCHAMP, Bailey, PAUL OBERSCHNEIDER, BOE, ” ROBERT JEFFREE, GARY SMITH, EVELYN, Yoruk Organizations: Bank of England, MPC, Traders, CANDRIAM, ING, LONDON, IG GROUP, Treasury, EMEA, Thomson

☆ CNBC Daily Open: The FOMO momentum
▼ + stars: | 2023-06-19 | by ( Yeo Boon Ping | ) www.cnbc.com time to read: +2 min

(Photo by I RYU/VCG via Getty Images)This report is from today's CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Stocks' streak snappedU.S. stocks fell Friday, with the S&P 500 and Nasdaq Composite snapping their six-day winning streak. Tesla's self-driving ambitionsElon Musk said the value of Tesla depends on whether it can crack the code to self-driving vehicles. There are three factors, according to Hartnett, that'll allow stocks to continue their current rally — though he worries it'll be a "big rally before big collapse."

Persons: RYU, Elon Musk, Tesla, Antony Blinken, Qin Gang, Biden, Bull, Michael Hartnett, Hartnett, it'll Organizations: Microsoft, Getty, CNBC, Nasdaq, gilts, Amazon, China U.S, Foreign, Qin, Bears, Bank of America Chief Investment Locations: Seattle , Washington, Blinken, China, Beijing, U.S

☆ Morning Bid: The UK consumer is feeling the heat
▼ + stars: | 2023-06-16 | by ( ) www.reuters.com time to read: +2 min

A look at the day ahead in European and global markets from Vidya RanganathanIt's not just the heatwave. UK consumers are paying through their noses for fish and chips too, and Friday brings the next quarterly survey of their views on inflation and rates. As Britain contends with one of the highest inflation rates among major advanced economies, the BOE seems set to hike rates a lot more. The stock has soared 17% this year, but pared some gains as grocers across Europe cap some prices. St. Louis Federal Reserve Bank President Bullard speaks in Oslo, NorwayEarnings/updates: Tesco (TSCO.L)Editing by Sam HolmesOur Standards: The Thomson Reuters Trust Principles.

Persons: Vidya Ranganathan It's, BOE, Bullard, Sam Holmes Organizations: Bank of England, Reuters, Tesco, Asda, June University of Michigan, Louis Federal Reserve Bank, Thomson Locations: Vidya, gilts, Europe, Brussels, Italy, Oslo, Norway

☆ Take Five: Keep calm and raise rates
▼ + stars: | 2023-06-16 | by ( ) www.reuters.com time to read: +5 min

June 16 (Reuters) - The Bank of England is facing a stormy gilts market while Turkey's new governor is expected to ramp up rates sharply at central bank meetings in the week to come. Markets show traders are placing an almost one-in-five chance the BoE will raise rates by half a point next week, up from near zero at the start of June. Reuters Graphics2/ECONOMIC CHECK UPA raft of decidedly hawkish noises from big central banks - including the Fed - has once again raised questions about how much central bank tightening is accelerating a global slowdown. U.S. manufacturing contracted for a seventh straight month, as new orders continued to plummet amid higher interest rates. May's blockbuster employment report could also provide more leeway for the RBA to tighten rates further.

Persons: Antony Blinken, Kevin Buckland, Lewis Krauskopf, Amanda Cooper, Karin Strohecker, BoE, confab, Philip Lowe, Ajay Banga, Hafize Gaye Erkan, Tayyip Erdogan, Erdogan, Mehmet Simsek, Philippa Fletcher Organizations: Bank of England, U.S, Reuters, Reserve Bank of, Investors, Ukraine, Conference, New, Pact, World Bank, Thomson Locations: Beijing, London, Paris, Tokyo, New York, United States, Europe, Japan, U.S, Australia, China, Dnipro, Ukraine

LONDON, June 15 (Reuters) - Hawkish central banks have sent a resounding "no" to markets betting recession would force rate cuts soon, leaving money managers scrambling for direction as the second half of the year approaches. "Markets have been wrong not only in their interpretation of the data but of the central bank reaction," he added. "Even though inflation is coming down, you are still getting that phase were the central banks think they need to talk hawkishly about this." Canada last week restarted rate hikes, Australia has come off a pause and Norway may have to accelerate hikes next week. BofA now expects two 25 bps interest rate hikes from the Fed this year, JPMorgan sees only one more and Morgan Stanley sees none.

Persons: Jason Simpson, Shorter, BofA, Morgan Stanley, Mark Nash, Nash, Kaspar Hense, Michael Michaelides, Shamik, BoE, they're, Dhar, Naomi Rovnick, Dhara Ranasinghe, Conor Humphries Organizations: U.S . Federal Reserve, European Central Bank, Bank of England, State, Bank of Japan, Treasury, JPMorgan, BlueBay Asset Management, BNY Mellon Investment Management, Thomson Locations: U.S, Canada, Australia, Norway, Shamik Dhar

☆ London's embattled hedge fund to be broken up as Wall Street banks cut ties over sexual harassment allegations
▼ + stars: | 2023-06-15 | by ( George Glover | ) www.businessinsider.com time to read: +2 min

London-based hedge fund Odey Asset Management will break itself up, it said in a letter to investors Thursday. Its founder Crispin Odey was accused of sexual harassment by 13 women in a Financial Times investigation published last week. JPMorgan and Morgan Stanley both cut ties with the asset manager after the allegations broke. Sign up for our newsletter to get the inside scoop on what traders are talking about — delivered daily to your inbox. The firm's founder Crispin Odey was accused of sexual harassment or assault by 13 women in a Financial Times investigation published last week.

Persons: Crispin Odey, Morgan Stanley, —, Odey, gilts, Liz Truss's, Liz Truss Organizations: Management, Financial, JPMorgan, Service, Investment, UBS, Authority, European Union – Locations: London, Brexit

The rapid rise in gilt yields has consequences for the wider economy. To some investors, gilts now increasingly look a bargain as 6% BoE interest rates appear unrealistic. Two-year gilt yields have risen by 1.1 percentage points this year, compared with a 0.3 percentage point increase for German two-year yields and 0.2 percentage points for U.S. Treasuries . Raising interest rates to 6% would "succeed in destroying demand" in the wider economy, he said. Ten-year gilt yields now pay an interest rate nearly 2 percentage points higher than the equivalent German government bond .

Persons: BoE, Liz, Britain's, Jim Leaviss, BoE Governor Andrew Bailey, gilts, We've, Mike Riddell, Riddell, Moyeen, There's, Islam, Naomi Rovnick, David Milliken, Toby Chopra Organizations: Labour Party, Bank of England, Bank of, Italy, Reuters Graphics, Allianz Global Investors, U.S, Barclays, Thomson Locations: Bank of England, Britain, British, gilts

☆ UK employment hits record high but the economy is still short 1 million workers
▼ + stars: | 2023-06-13 | by ( Hanna Ziady | ) edition.cnn.com time to read: +4 min

London CNN —The number of people in work in the United Kingdom has climbed above its pre-pandemic level for the first time, reaching a record high. Employment hit a record 33.1 million between February and April, with increases in both the number of employees and self-employed workers, the Office for National Statistics said Tuesday. Employment in the United Kingdom has recovered more slowly than in any other major economy since the pandemic, according to the UK Institute for Employment Studies. This is the fastest rise on record, apart from the period when the figures were distorted by the pandemic, Morgan noted. Food inflation remained above 19% — near a 45-year high — hitting poor households the hardest because they spend more of their available income on food.

Persons: Darren Morgan, Morgan, Liz Truss, Jeremy Hunt, ”, Ashley Webb, Anna Cooban Organizations: London CNN, National Statistics, Employment, UK Institute for Employment Studies, Bank of, “, Capital Economics, Bank, Ill Locations: United Kingdom, Europe, United States

☆ UK short-term borrowing costs shoot past 'mini-budget' crisis levels on strong labor data
▼ + stars: | 2023-06-13 | by ( Jenni Reid | ) www.cnbc.com time to read: +1 min

LONDON — U.K. borrowing costs, as measured by the yield on short-dated government bonds, rose above levels last seen following Britain's market-destabilizing "mini-budget" after labor market data showed rising wage growth on Tuesday. U.K. annual average wage growth excluding bonuses accelerated from 6.7% to 7.2% in the February-April quarter, the fastest rate on record. Economists polled by Reuters had expected 6.9% wage growth for the reported first period since the national hourly minimum wage was increased to £10.42 ($13.1), from £9.50. Real pay, adjusted for inflation, showed pay growth was down by 2% including bonuses, and by 1.3% excluding them. Unemployment was 0.1 percentage points higher because of a decline in the number of "economically inactive" people not in work or looking for work.

Persons: gilts Organizations: Reuters, British Office, National Statistics Locations: London

☆ Pound heads for biggest weekly gain in six months
▼ + stars: | 2023-06-02 | by ( Amanda Cooper | ) www.reuters.com time to read: +3 min

LONDON, June 2 (Reuters) - Sterling headed for its biggest one-week rally against the dollar in six months on Friday, as U.S. interest rates looked increasingly likely to plateau sooner than UK rates. The pound has gained 1.5% against the dollar this week, the most since early December, and nearly 1.1% against the euro - which would be its largest weekly increase in nearly four months. Meanwhile, as UK inflation remains stubbornly high, traders have reassessed the outlook for monetary policy in Britain too. Money markets show markets are pricing for UK rates to peak at 5.32% by year-end, up from 4.50% now. A month ago, the expectation was that UK rates would be around 4.80% by December.

Persons: Sterling, Warren Venketas, Jordan Rochester, Amanda Cooper, Susan Fenton Organizations: NFP, Federal Reserve, Treasury, U.S, Nomura, Thomson Locations: Washington, Britain, Rochester

☆ Analysis: Germany leads big bond rally as inflation finally heads down
▼ + stars: | 2023-06-01 | by ( Yoruk Bahceli | ) www.reuters.com time to read: +5 min

Borrowing costs, or bond yields, in the benchmark euro area issuer are down at least 20 basis points (bps) this week , . Yet this week's notable moves suggest investors are plumping with the view that easing inflation and recession risks are strong bond buy signals. Traders now expect the ECB hikes to peak at around 3.7% by September, suggesting two more hikes from 3.25% currently. COMPLICATEDInvestors cautioned that the European inflation outlook remained more complicated than in the United States, where inflation broadly is down sharply from peaks. This week's fall in borrowing costs followed sharp rises the previous two weeks on bets for more rate hikes.

Persons: Kaspar Hense, Flavio Carpenzano, It's, Cosimo Marasciulo, Marasciulo, BlueBay's Hense, Oliver Eichmann, DWS, Eichmann, Yoruk Bahceli, Harry Robertson, Dhara Ranasinghe, Susan Fenton Organizations: Bank, British, Thursday's, Traders, BlueBay Asset Management, Capital Group, ECB, U.S . Federal Reserve, General Investment Management, Bank of England, NatWest, Pictet Wealth Management, Thomson Locations: Germany, United States, Europe, Amundi, U.S, Britain, DWS

☆ Morning Bid: Debt deal is near, Fed peak is not
▼ + stars: | 2023-05-26 | by ( ) www.reuters.com time to read: +4 min

Investors juggled these three strands over the past 24 hours, with top-line equity index relief from the Nvidia-inspired spur to artificial intelligence and chip stocks everywhere. And the banking stress that changed the picture in March appears to be settling too, judging by the latest central bank numbers. Friday brings some hope that White House and congressional leaders can ink a deal on lifting the U.S. debt ceiling they indicated overnight was now close - just before the Treasury Department runs out of cash from June 1 next week. Anxieties in the Treasury bill market only eased a touch, and one-month bill yields remained above 6% early Friday. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

☆ Quantitative tightening: What happens when $2 trillion is sucked out of the global economy
▼ + stars: | 2023-05-19 | by ( Julia Horowitz | ) edition.cnn.com time to read: +7 min

“Quantitative tightening,” or QT, by top central banks will suck $2 trillion in liquidity out of the financial system over the next two years, according to a recent analysis by Fitch Ratings. Investors and banks calibrate their strategies to the amount of money in the financial system, he noted. Then, central banks started withdrawing liquidity from the financial system. Even worse, many banks have large holes on their balance sheets because central banks have simultaneously jacked up interest rates. While government debt levels have skyrocketed in recent years, the cost of servicing that debt has been tamped down by the willingness of central banks to buy large chunks of it.

☆ UK draws record 46.4 billion pounds of demand for new inflation-linked bond
▼ + stars: | 2023-04-26 | by ( David Milliken | ) www.reuters.com time to read: +2 min

LONDON, April 26 (Reuters) - Britain received a record 46.4 billion pounds ($57.9 billion) in demand from investors at the launch of a new inflation-linked government bond which will mature in March 2045, the United Kingdom Debt Management Office said on Wednesday. However the strong demand came at a price, with the 4.5 billion pounds of new gilts paying investors a return of 0.6543% on top of retail price inflation - the greatest real yield for any index-linked gilt sold via syndication since May 2011. The DMO said domestic investors accounted for 93% of the allocations of the bond. The volume of orders is the highest for any index-linked bond issued via syndication by the DMO, although a conventional gilt syndication of green gilts in 2021 had order volumes in excess of 100 billion pounds. The DMO has sold 21.9 billion pounds of gilts out of a target of 237.8 billion pounds for the financial year which started in April.

If it is just a lagged statistical quirk, then the huge disparity in March inflation rates - of some 3-5 percentage points with western peers - should narrow sharply by yearend. With an election due next year, that may prove a big factor in any re-convergence of inflation rates if the cost of that is a much deeper economic downturn that rest. The question about Britain as an inflation outlier re-opens the age-old issue about just how that should be priced into sterling. For much of the past 10 years, G7 inflation rates were largely locked together in either their subdued pre-pandemic state or during the wild price spikes since. If UK inflation turns "idiosyncratic" among its peers during the much-vaunted normalization, then currency markets may need to rethink fundamental long-term assumptions about purchasing power, Gallo reckons.

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