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☆ Moody’s lowers UK’s outlook to negative
▼ + stars: | 2022-10-21 | by ( Hanna Ziady | ) edition.cnn.com time to read: +2 min

The affirmation of the Aa3 rating is a reflection of the UK’s economic resilience, Moody’s said in a statement. Credit ratings are essentially credit scores for governments and companies. Germany, Canada, Switzerland, Australia and the United States have some of the best credit ratings in the world, while Argentina, Nigeria, Pakistan and India have some of the lowest ratings. Soaring food costs drove the annual rate of inflation to 10.1% in September, returning it to July’s 40-year high. As well as driving up borrowing costs for the government and adding pressure to public spending, any credit ratings downgrade would only weaken investor appetite for UK assets.

☆ It would be a 'real mistake' to assume other countries will avoid UK-like turmoil, and the US must watch its fiscal issues, former Treasury Secretary Larry Summers says
▼ + stars: | 2022-10-21 | by ( Jennifer Sor | ) www.businessinsider.com time to read: +2 min

Other nations could see the same market turmoil that played out in the UK, ex-Treasury Secretary Larry Summers warned. He pointed to the risk of a "doom loop" created by unsustainable deficits and rapidly rising interest rates. "Things can change extraordinarily fast if you lose credibility," Summers said in an interview with Bloomberg TV. Summers also noted liquidity issues in the market which could eventually lead to a situation where there are more sellers than buyers. "The fiscal issues need, sooner or later, to be back on the table in the United States."

☆ U.S. 2022 budget deficit halves to $1.375 trillion despite student loan costs
▼ + stars: | 2022-10-21 | by ( David Lawder | ) www.reuters.com time to read: +4 min

WASHINGTON, Oct 21 (Reuters) - The U.S. government on Friday reported that its fiscal 2022 budget deficit plunged by half from a year earlier to $1.375 trillion, due to fading COVID-19 relief spending and record revenues fueled by a hot economy, but student loan forgiveness costs limited the reduction. "You know, we've gone from an historically strong economic recovery to a steady and stable growth, while reducing the deficit," Biden said. Outlays for fiscal 2022, which ended Sept. 30, fell by a record $550 billion, or 8% from last year to $6.272 trillion. The move brought the September budget deficit to $430 billion, more than six times the prior-year September deficit of $65 billion. It also includes the extension of a COVID-19 moratorium on all student loan payments until the end of 2022, which added about $21 billion in budgetary costs.

But Broadbent's concentration on the likely peak terminal rate next year is what matters most. For context, that UK terminal rate, now pencilled in for around the middle of 2023, rocketed almost two full percentage points from just prior to the botched mini-budget to as high as 6.25%. Fed terminal rates, now targeted about March next year, have jumped 150 bps to 5% over the past two months. And Morgan Stanley, for example, see a UK terminal rate as low as 4% - a huge drop from current market pricing. The stubborn refusal of terminal rate pricing to return to where it was last month reflects the extent of those jitters.

"We are confronting speculators strictly," Suzuki told a regular news conference, when asked whether the Japanese yen was under attack by speculators. Suzuki was speaking as the dollar strengthened to 150.29 yen overnight, the highest since August 1990, after breaking the key psychological level of 150 on Thursday. "It's not that Japan's finances are undergoing a major shift in phase leading to the current yen weakening," Suzuki said, when asked if there were lessons for Japan from Britain's predicament that led to the resignation of Prime Minister Liz Truss. On the course of future monetary policy, Suzuki said it is up to the BOJ to decide. "We'll strive to maintain fiscal discipline with a major target of achieving primary budget surplus in fiscal 2025."

☆ UK stocks hit by weak retail sales, rising yields
▼ + stars: | 2022-10-21 | by ( Sruthi Shankar | ) www.reuters.com time to read: +3 min

The blue-chip FTSE 100 index (.FTSE) fell 1.0%, while the midcap FTSE 250 (.FTMC) slipped 1.6%. Truss quit on Thursday after the shortest and most chaotic tenure of any British prime minister, forced out after her unfunded tax cut proposals crashed the pound and sent British borrowing costs soaring. Former finance minister Rishi Sunak, Penny Mordaunt and former prime minister Boris Johnson are among the likely candidates. UK's retail index (.FTNMX404010) fell 4.1%, heading towards a more than two-year low hit last week. read moreMeanwhile, U.S. and European government bond yields surged further as investors priced in aggressive policy tightening by the Federal Reserve.

LONDON — Her tenure as Britain’s prime minister began in the early days of fall, but it didn’t even last until winter. The plan was criticized not only by the opposing Labour Party, but also President Joe Biden and the International Monetary Fund. Chancellor of the Exchequer Kwasi Kwarteng and British Prime Minister Liz Truss attend the annual Conservative Party conference on Oct. 2. Truss told Parliament on Wednesday, “I am a fighter, not a quitter,” after repeatedly being told she was unfit for office by opposition lawmakers. Under an expedited process, leadership challengers must win the support of 100 fellow Conservative Party lawmakers (out of a total of 357) by Monday afternoon.

☆ British Prime Minister Liz Truss resigns after economic plan sparked turmoil
▼ + stars: | 2022-10-20 | by ( Https | Media-Cldnry.S-Nbcnews.Com Image Upload Newscms Patrick-Smith-Circle-Byline-Template.Jpg | Patrick Smith | ) www.nbcnews.com time to read: +4 min

LONDON — British Prime Minister Liz Truss announced Thursday that she would resign after just six weeks in office, following a disastrous and rapidly reversed economic plan that sent the pound plunging and her government into chaos. Britain's Prime Minister Liz Truss delivers a speech outside No. She ended the brief statement by saying: "I will remain as prime minister until a successor is chosen." Liz Truss is now the shortest-serving prime minister in British history. Her personal approval rating fell to minus 70, according to pollsters at YouGov, making her the most unpopular party leader in British history.

☆ Britain’s bond crisis reverses over the government: podcast
▼ + stars: | 2022-10-20 | by ( Aimee Donnellan | ) www.reuters.com time to read: 1 min

LONDON, Oct 20 (Reuters Breakingviews) - New finance minister Jeremy Hunt has scrapped most of his predecessor’s unfunded tax cuts, scuppering Prime Minister Liz Truss’s growth plan. In this Viewsroom podcast, Breakingviews columnists debate what the U-turn means for markets – and whether Truss can survive. Listen to the podcastFollow @aimeedonnellan on TwitterRegister now for FREE unlimited access to Reuters.com RegisterEditing by Thomas Shum and Oliver TaslicOur Standards: The Thomson Reuters Trust Principles. Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

"The MPC (Monetary Policy Committee) is likely to respond relatively promptly to news about fiscal policy," Broadbent said in the speech delivered at Imperial College in London. Despite falling in recent days, the expectations financial markets for the BoE's Bank Rate to peak at about 5.25% was "by some distance the largest rise in market interest rates between MPC forecasts since the Committee was founded," Broadbent said. Investors further reined in their expectations of a full percentage-point interest rate increase by the BoE next month and British government bond future prices rose as Broadbent spoke. Rate futures put a 17% chance on a 100 basis-point increase on Nov. 3, down from 25% earlier on Thursday. A whole percentage-point rate hike was seen as a near certainty before Truss was forced to backtrack on her unfunded tax cut plans.

☆ Taking cover in bonds ahead of a recession? BlackRock says that's now an 'obsolete' strategy
▼ + stars: | 2022-10-20 | by ( Weizhen Tan | ) www.cnbc.com time to read: +4 min

One important part of the recession playbook is "obsolete" — and that's seeking shelter in bonds, according to BlackRock, the world's largest asset manager. "We're underweight government bonds because yields have room to move higher, and we don't think they can be a safe haven when recession comes," BlackRock wrote. Higher rates and inflation will create a "ripe environment" for investors to demand higher term premiums for long-term bonds, BlackRock said. The move sent financial markets into a tailspin , as investors ditched U.K. bonds and sold off the pound. What to buy Investors still looking to buy bonds should prefer inflation-linked ones as they are "not pricing in persistent inflation," BlackRock said.

☆ The pound jumps against the dollar after Liz Truss resigns as prime minister, but more volatility could be in store for markets as political and economic risks linger
▼ + stars: | 2022-10-20 | by ( Carla Mozée | ) www.businessinsider.com time to read: +3 min

The pound rose against the US dollar Thursday as Liz Truss resigned as UK prime minister. Truss' 45 days in office were marked by turmoil in financial markets over her government's mini-budget. Analysts said market volatility may lie ahead as the UK looks for its new prime minister. Pound sterling rose as much as 1.1% to $1.1337 before paring the rise to 0.8%. To investors, the UK looks ungovernable, and its economy resembles that of an emerging market, not a G7 nation," he wrote.

☆ UK PM Truss clings to power as chaos in Westminster deepens
▼ + stars: | 2022-10-20 | by ( ) www.reuters.com time to read: +2 min

LONDON, Oct 20 (Reuters) - British Prime Minister Liz Truss struggled to retain a grip on power on Thursday, a day after a second top minister quit and rowing and jostling broke out among her lawmakers in parliament in a dramatic breakdown of unity and discipline. Lawmakers openly argued in parliament on Wednesday amid confusion over whether a vote on fracking was a confidence vote in her administration. In a sign of the chaos, Downing Street issued a statement at 1:33 am (0033 GMT) to say the prime minister had "full confidence" in the chief whip and her deputy. "The whips will now be speaking to Conservative MPs who failed to support the government," a government spokesperson said. A handful of lawmakers have openly called for Truss to quit, and others have discussed who should replace her.

☆ Investors rein in BoE rate hike bets on Broadbent comments
▼ + stars: | 2022-10-20 | by ( ) www.reuters.com time to read: +2 min

Such a big increase in Bank Rate looked a near certainty before Truss was forced to backtrack on her unfunded tax cut plans this month. The 30-year gilt yield was up by about a basis points at 4.000% at 9:51 am (0851 GMT), having touched a session high 4.103% earlier. The yield on 20-year British government bonds similarly rose on Thursday, up about two basis points on the day, having also fallen sharply on Wednesday. Two-year gilt yields were up by 11 basis points on Thursday. But the difference in yield between gilts and similar German and U.S. government bonds remains significantly wider than before the crisis began.

☆ With UK leader Liz Truss quitting, here are the top contenders to replace her
▼ + stars: | 2022-10-20 | by ( Karen Gilchrist | ) www.cnbc.com time to read: +6 min

"Given the situation, I cannot deliver the mandate on which I was elected by the Conservative Party," she said in a brief speech Thursday afternoon. Here are the main contenders for the top job:Rishi SunakRishi Sunak, Britain's former finance minister and Truss' main opponent in this year's Conservative Party leadership race, is now seen as a favorite to replace her. Britain's former finance minister Rishi Sunak was Liz Truss's main opponent in this year's Conservative leadership race. Penny MordauntFormer Defense Secretary Penny Mordaunt surged to prominence during the summer's leadership race, before finishing in third place to Truss and Sunak. Leader of the House of Commons Penny Mordaunt is seen as a consensus candidate who could unite a splintered Conservative Party.

☆ Embattled British PM Truss loses 2nd minister in a week amid political and economic turmoil
▼ + stars: | 2022-10-19 | by ( Associated Press | ) www.nbcnews.com time to read: +5 min

British Prime Minister Liz Truss described herself as “a fighter and not a quitter” Wednesday as she faced down a hostile opposition and fury from her own Conservative Party over her botched economic plan. And within hours of Truss’ appearance in Parliament for a regular session titled Prime Minister’s Questions, she lost a senior member of her government. Truss faced another test in Parliament later Wednesday when lawmakers vote on a Labour Party motion seeking to ban fracking for shale gas — a policy that Truss recently approved. Conservative Party whips said the vote would be treated as “a confidence motion in the government,” meaning the government would fall if the motion passed, triggering an election. Some Conservative legislators believe Truss could be forced to resign if the party agrees on a successor.

☆ Factbox: Who are the candidates to replace UK PM Truss?
▼ + stars: | 2022-10-19 | by ( Kate Holton | ) www.reuters.com time to read: +4 min

LONDON, Oct 20 (Reuters) - Liz Truss said on Thursday she would resign as British prime minister just six weeks after she was appointed. A leadership election will be completed within the next week to replace Truss, who is the shortest serving prime minister in British history. Wallace, a former soldier, was defence minister for both Johnson and Truss, leading Britain's response to Russia's invasion of Ukraine. Boris JohnsonFormer prime minister Johnson, a journalist, has loomed large over British politics ever since he became London Mayor in 2008. The Times reported that Johnson is expected to stand in the Conservative Party leadership contest.

"I think it is a shambles and a disgrace," he said, in a video that a couple of other Conservative lawmakers tweeted in agreement. "I have made a mistake, I accept responsibility, I resign," she said in a letter to the prime minister. As a replacement, Truss appointed former minister Grant Shapps, who said recently that Truss faced a massive battle to survive. He also failed to offer a ringing endorsement of the prime minister. "I have been very clear that I am sorry, and I have made mistakes," Truss told jeering opposition lawmakers in parliament.

☆ 'Fighter' Truss mocked in parliament as UK PM defends her record
▼ + stars: | 2022-10-19 | by ( Andrew Macaskill | ) www.reuters.com time to read: +3 min

Truss repeated her apology to the British people but accused Labour of not grasping "economic reality", which was met with howls of laughter from the opposition benches. Just last week, she taunted the opposition Labour Party that her two-year energy subsidy programme would help families through this winter and next. Starmer said Truss's economic plan had been built on "fantasy economics" and had ended in disaster. The Labour leader pointed out that Truss had insisted last week there would be no government spending cuts. "What's the point of a prime minister whose promises don't even last a week?"

With Jeremy Hunt taking up the role on Friday, Britain has had four finance ministers in just four months. Prior to the 2016 Brexit vote, Britain had four finance ministers in 23 years, underlining a sense of stability that is now gone. The response was brutal: the pound slumped, government borrowing costs surged, lenders pulled mortgage deals and the Bank of England had to intervene to stop some pension funds from going under. While Truss had touted low corporation tax as a way to attract business investment, the executives said they wanted stability. British business investment, which flatlined after the 2016 Brexit vote and then fell sharply during the pandemic, was 6% lower in the second quarter of this year than its level of six years ago, in stark contrast to international peers.

☆ Turbulent markets jolt currency hedge funds from decade-long slumber
▼ + stars: | 2022-10-18 | by ( Nell Mackenzie | ) www.reuters.com time to read: +6 min

But a post-crisis wash of central bank quantitative easing and developed-world interest rates barely above zero sapped the near $7 trillion-a-day global currency markets of the kind of flows that hedge funds thrive on. Similarly, HFR’s HFRI 500 Currency Index, which also tracks these funds, is up 8.29%, its best performance since 2007 and soundly beating the 3.8% rise in a broader hedge fund index. The years of muted volatility culled existing currency hedge funds and deterred the creation of new ones, a process which typically takes 7-8 months. (Currency hedge fund launches and closures )A few stuck it out. It has a $4.5 billion currency fund and a $4.4 multi-asset fund, recent public disclosures showed.

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☆ UK gilt yields rise as BoE pooh-poohs report of delay to bond sales
▼ + stars: | 2022-10-18 | by ( ) www.reuters.com time to read: +2 min

The FT said the BoE would probably push back the start of its gilt sales from its latest scheduled date of Oct. 31, having already delayed it from an original date of Oct. 6. Register now for FREE unlimited access to Reuters.com Register"This morning's FT report that the BoE has decided to delay MPC gilt sales ('QT') is inaccurate," a spokesperson for the central bank said. Twenty- and 30-year gilt yields , were up by less, around 4 bps on the day. The two-year yield , which is most sensitive to short-term moves by the central bank, showed the biggest rise, up 13 bps on the day. British government bond yields soared in recent weeks after the government of new Prime Minister Liz Truss announced a string of unfunded tax cuts.

☆ INDIA RUPEE Rupee jumps as UK fiscal budget turnaround brings cheer
▼ + stars: | 2022-10-18 | by ( Anushka Trivedi | ) www.reuters.com time to read: +2 min

MUMBAI, Oct 18 (Reuters) - The Indian rupee strengthened on Tuesday to hover close to the 82 per dollar mark, as risk sentiment improved after reversal of Britain's controversial fiscal plans pressured the greenback. The rupee jumped 0.35% to 82.05 by 0442 GMT, after having traded in a narrow band near the 82.40 level for the past five sessions. The currency has not traded under 82 per dollar in nearly two-weeks and traders see low chances of it breaching that in this session. Any level below 82 per dollar was good for importers with near-term exposures to buy as USD/INR premiums are currently lower too, he added. Register now for FREE unlimited access to Reuters.com RegisterReporting by Anushka Trivedi in Mumbai; Editing by Neha AroraOur Standards: The Thomson Reuters Trust Principles.

☆ Eight out of 10 Britons disapprove of Liz Truss-led government - poll
▼ + stars: | 2022-10-18 | by ( ) www.reuters.com time to read: +1 min

People cross Waterloo Bridge during the evening rush-hour with skyscrapers of the City of London financial district seen behind in London, Britain, October 10, 2022. REUTERS/Toby MelvilleLONDON, Oct 18 (Reuters) - Eight out of 10 people in Britain now disapprove of the government, a YouGov poll showed on Tuesday, as the country deals with an economic crisis inflamed by new Prime Minister Liz Truss's now-abandoned attempts at radical tax cutting reforms. The poll found that 77% Britons disapproved of the Conservative-led government, the highest in 11 years of YouGov tracking, the company said. YouGov polled 1,772 people for the Oct. 17 update of its regular series on government approval ratings, which was published on Tuesday. Register now for FREE unlimited access to Reuters.com RegisterReporting by Muvija M; editing by William JamesOur Standards: The Thomson Reuters Trust Principles.

The blue-chip FTSE 100 (.FTSE) closed 0.24% up and the domestically focussed FTSE 250 (.FTMC) ended 0.15% higher. "At the end of the day, the UK government blinked, while the BoE has seen its credibility restored," said Darby. He added that there is room for a sizeable change in sentiment towards domestically exposed FTSE 250 which had been battered recently. Shell (SHEL.L) is among a number of companies joining a second bidding round to acquire Danish biogas producer Nature Energy, for around $2 billion sources familiar with the matter said, as energy firms race to boost low-carbon businesses. Bellway Plc (BWY.L) slipped 2.2% as the homebuilder warned of moderating demand, pressured by rising mortgage rates.

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