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☆ Growth push went 'too far, too fast', says UK finance minister Hunt
▼ + stars: | 2022-10-15 | by ( ) www.reuters.com time to read: +2 min

LONDON, Oct 15 (Reuters) - Britain's new finance minister Jeremy Hunt said the government had gone "too far, too fast" in its drive for growth after Prime Minister Liz Truss was forced to fire his predecessor and make U-turns on tax-cutting plans amid market turmoil. Truss appointed Hunt on Friday to replace Kwasi Kwarteng, and said she was scrapping parts of their controversial economic package announced only three weeks earlier, which included billions of pounds of unfunded tax cuts. The drive on growing the economy is right - it means more people can get good jobs, new businesses can thrive and we can secure world class public services," Hunt said late on Saturday. Register now for FREE unlimited access to Reuters.com Register"But we went too far, too fast," he added in the statement. Register now for FREE unlimited access to Reuters.com RegisterReporting by Michael Holden Editing by Helen PopperOur Standards: The Thomson Reuters Trust Principles.

LONDON, Oct 15 (Reuters) - Britain's new finance minister Jeremy Hunt said on Saturday that some taxes would go up and government spending would rise by less than previously planned as he warned of difficult decisions ahead to restore Britain's economic policy credibility. Truss said that corporation tax would increase, abandoning her plan to keep it at current levels. "We will have some very difficult decisions ahead," he told Sky News. But what I can do is show that we can pay for our tax and spending plans and that is going to need some very difficult decisions on both spending and tax." "Some taxes will not be cut as quickly as people want, and some taxes will go up.

The dollar also kept rising against Japan's beleaguered yen, hitting a fresh 32-year peak of 148.86. But as the session wore on, equity declines deepened with oil prices pushing energy stocks (.SPNY) down sharply and consumer stocks (.SPLRCD) falling sharply. "We're back to looking at inflation data very carefully. Even though Wall Street had rallied on Thursday despite soaring inflation data, investors appeared to return their focus to the data on Friday, according to Anthony Saglimbene, chief market strategist at Ameriprise Financial. The euro was down 0.55% at $0.9719 while the Japanese yen weakened 0.99% at 148.68 per dollar.

☆ British PM Liz Truss axes finance minister, tax cuts that sent pound crashing
▼ + stars: | 2022-10-14 | by ( Https | Media-Cldnry.S-Nbcnews.Com Image Upload Newscms Patrick-Smith-Circle-Byline-Template.Jpg | Patrick Smith | ) www.nbcnews.com time to read: +5 min

LONDON — Embattled British Prime Minister Liz Truss fired her finance minister and abandoned a flagship policy Friday, in a bid to save her job after her economic plan stoked weeks of market panic. Earlier, Truss removed Finance Minister Kwasi Kwarteng just 38 days after the pair took power. Kwarteng becomes the second shortest-serving chancellor of the exchequer, as the British finance minister is known. Truss' personal office confirmed the next finance minister will be Jeremy Hunt, a former health secretary and minister under successive Conservative governments. Crucially, the bank’s bond-buying program is set to end Friday, meaning the government must convince markets its economic plan is sound to avoid further chaos.

☆ One in 5 Britons heading for mortgage pain - think-tank
▼ + stars: | 2022-10-14 | by ( ) www.reuters.com time to read: +2 min

The Resolution Foundation, which focuses on issues facing lower-income households, said more than 5 million families will see their annual mortgage payments rise by an average of 5,100 pounds ($5,700.27) over the next two years. Of that, 1,200 pounds reflected the expectations of higher interest rate rises since the Sept. 23 "mini-budget" that prompted a surge in borrowing costs with its unfunded tax cuts. The Bank of England has raised its benchmark borrowing rate from 0.1% last December to 2.25% now and is expected to announce another big increase on Nov. 3 followed by more which will take Bank Rate above 5%, according to bets in financial markets. The Resolution Foundation said 1.2 million mortgage-holding households on variable rate deals would see their housing costs rise in with Bank Rate while 85% with fixed-rate deals would see their cost build more gradually. ($1 = 0.8947 pounds)Register now for FREE unlimited access to Reuters.com RegisterReporting by Muvija M Writing by William Schomberg Editing by Andy BruceOur Standards: The Thomson Reuters Trust Principles.

About 110,000 Royal Mail staff went on strike on Thursday to demand better pay and working conditions. It was the first of 19 days of strikes planned to coincide with the peak holiday shopping season, including Black Friday and Cyber Monday. In a statement posted to its website on Friday, the union said it was demanding a government inquiry into the “gross mismanagement” of Royal Mail. Royal Mail has said that most letters will not be delivered on strike days, and customers should expect delays to parcel deliveries. It would deliver as many tracked parcels and those tagged for fast-track delivery as possible on strike days, the company added.

Yet he ultimately carried the can for an unwelcome fiscal plan that roiled bond markets, spooked investors and sparked a major backlash from governing Conservative Party lawmakers. Cutting his visit short, he flew back to London on Friday to "continue work at pace" for a medium-term fiscal plan due at the end of the month. Nor were further moves to re-embrace Treasury orthodoxy through the choice of Scholar's replacement and a decision to bring forward a medium-term fiscal plan and forecasts. In a reply to Kwarteng, Truss said she was deeply sorry to lose a long-standing friend from government. But a finance minister being ditched so quickly for his policies - especially when they were so closely aligned with the prime minister - is unprecedented in modern times.

☆ Take Five: Calm or calamity?
▼ + stars: | 2022-10-14 | by ( ) www.reuters.com time to read: +5 min

Traders are back on Japanese yen intervention watch, while the U.S. earnings season and a congress of China's ruling Communist Party kick off. Growing expectations of a government u-turn on most of its unfunded tax cuts should end much of the pain. The carnage in British gilts has exposed vulnerabilities in the pensions sector, shining a light on financial stability risks. The IMF warns of "disorderly asset repricings" and "financial market contagion." A market slide has moderated stock valuations, but a downgrade in the earnings outlook could dampen equities' attractiveness.

☆ Could the British pound hit parity with the dollar? Here's what the bulls and bears say
▼ + stars: | 2022-10-14 | by ( Ganesh Rao | ) www.cnbc.com time to read: +3 min

First, it fell to an all-time low against the U.S. dollar after the U.K. government announced its "mini-budget." And of course, a strong dollar hasn't helped either . Strategists at Nomura were the most bearish on the pound, expecting it to trade below parity — at $0.98 — by the fourth quarter. ING: £1 = $1-$1.05 Francesco Pesole, an FX strategist at ING, said the pound looked too strong at $1.10. "A policy mix of loose fiscal policy (with little detail on how to close the deficit) and milder monetary tightening gives investors few reasons to hold the pound," they said.

☆ UK Finance Minister Kwasi Kwarteng fired after market chaos and tax-cutting plans
▼ + stars: | 2022-10-14 | by ( Elliot Smith | ) www.cnbc.com time to read: +1 min

Kwasi Kwarteng, UK chancellor of the exchequer, speaks at a fringe event during the Conservative Party's annual autumn conference in Birmingham, UK, on Tuesday, Oct. 4, 2022. LONDON — British Finance Minister Kwasi Kwarteng was fired on Friday after less than six weeks in the role, amid mounting political pressure and market chaos. "The economic environment has changed rapidly since we set out the Growth Plan on 23 September. The Medium-Term Fiscal Plan is crucial to this end, and I look forward to supporting you and my successor to achieve that from the backbenches." Jeremy Hunt — a former Health Secretary and Foreign Secretary — was announced as Kwarteng's successor.

London CNN Business —UK Prime Minister Liz Truss has fired finance minister Kwasi Kwarteng and ditched a big part of her discredited economic strategy in a desperate bid to rescue her month-old premiership. “It was right, in the face of the issues we had, that I acted decisively to ensure that we had economic stability,” Truss said Friday. Kwarteng presented a “mini budget” just three weeks ago, promising tax cuts worth £45 billion ($50 billion) and increased borrowing with the hope of boosting UK economic growth. “Liz Truss’ reckless approach has crashed the economy, causing mortgages to skyrocket, and has undermined Britain’s standing on the world stage,” he said. Kwarteng had flown back from the IMF meeting in Washington, D.C., overnight for discussions with Truss.

As Truss spoke on Friday gains made in anticipation of the corporation tax U-turn faded. Ten-year gilt yields were 40 bps above session lows hit earlier on Friday, also pushed up by moves in bond yields globally. UNDERWHELMEDBritain's mini-budget three weeks ago triggered some of the biggest ever jumps in British bond yields, exposed vulnerabilities in the pensions sector -- undermining the country's financial stability. "How it impacts liquidity on the gilt market going forward is something we are monitoring closely." Rabobank's McGuire said pressure on UK assets could lead the BoE to re-intervene in the bond market or delay its quantitative tightening, bond-selling plans.

☆ European markets rise on UK fiscal U-turn hopes; Stoxx 600 up 1%
▼ + stars: | 2022-10-14 | by ( ) www.cnbc.com time to read: +1 min

British Finance Minister Kwasi Kwarteng (left) on Monday morning confirmed that the government would be scrapping its plans to cut tax for the country's highest earners. European markets are set to jump on Friday as speculation abounds that the U.K. government could be about to U-turn on its controversial fiscal policies. Finance Minister Kwasi Kwarteng flew home early from the International Monetary Fund in Washington on Thursday night as ministers convened to address the nation's economic chaos. Markets in Asia-Pacific then rallied overnight as investors seemingly shook off the inflation report and instead focused on hopes for a U.K. fiscal U-turn and further stimulus from the Chinese government. U.S. stock futures were higher in early premarket trade on Friday as investors await a slew of corporate earnings from the country's biggest banks.

☆ UK cliff edge arrives as Bank of England prepares to end its emergency bond buying
▼ + stars: | 2022-10-14 | by ( Elliot Smith | ) www.cnbc.com time to read: +5 min

The Bank's Financial Stability Committee on Sep. 28 announced a two-week emergency purchase program for long-dated U.K. government bonds. Bloomberg | Bloomberg | Getty ImagesLONDON — The Bank of England's emergency bond-buying program draws to a close on Friday, with traders remaining on edge as volatility in the U.K. bond market looks set to continue. The central bank initially announced the two-week intervention in the long-dated bond market on Sep. 28, having been informed that a number of liability driven investment (LDI) funds — held by pension plans — were hours from collapse as U.K. government bond prices plunged. The BOE's Pill also highlighted that recent actions taken to ensure orderly market function and financial stability sought to preserve the effectiveness of monetary policy, but should not be considered monetary policy actions in themselves. Chris Lupoli, U.K. rates and inflation strategist at BNP Paribas , told CNBC Thursday that the Bank of England remained focused on the temporary purchases serving as a "backstop."

The battered pound and government bonds rallied on Thursday as Prime Minister Liz Truss's government began re-examining a package for unfunded tax cuts that has sent borrowing costs surging and forced the Bank of England to intervene. Asked if the government was preparing to change course, he told Sky News: "I saw the prime minister yesterday. The prime minister and the chancellor are absolutely determined to deliver on the growth plan. The sense of chaos at the heart of government has fuelled speculation as to whether Truss and Kwarteng can survive. Truss was elected by the members of the party, and not the broader electorate, as the fourth prime minister in six politically turbulent years in Britain.

Other media said Truss would allow corporation tax to rise in April, reversing a decision to freeze it that was part of Kwarteng's "mini-budget" announced last month. Yields for index-linked gilts also fell sharply. Bets on a peak for rates to hit 5.5% next year were no longer fully priced in. They have gathered pace as investors offered more bonds to the central bank with the scheme nearing its end. LDI funds had been hit hard by the record slump in long-dated gilt prices after Kwarteng's mini-budget.

☆ Reactions: UK's Truss fires Kwarteng, set to U-turn on tax cuts
▼ + stars: | 2022-10-14 | by ( ) www.reuters.com time to read: +5 min

LONDON, Oct 14 (Reuters) - British Prime Minister Liz Truss fired her finance minister Kwasi Kwarteng and news reports said she will scrap later on Friday parts of the economic programme of big, unfunded tax cuts that they delivered last month. Consequently, the scope for a rally in gilts (move lower in yields) and sterling would seem to be limited." BENJAMIN NABARRO, ECONOMIST, CITI"The key issue in the near term is the contradiction between monetary and fiscal policy. RACHEL REEVES, OPPOSITION LABOUR PARTY'S FINANCE CHIEF"This humiliating u-turn is necessary - but the real damage has already been done. We may well be through the worst of the volatility but I fear that the UK is nowhere near out of the woods."

To replace him, she appointed Jeremy Hunt, a former foreign and health secretary who had backed her rival Rishi Sunak in this summer's race to become Conservative Party leader. He is the fourth finance minister in as many months in Britain, where millions are facing a cost of living crisis. Kwarteng becomes Britain's shortest serving finance minister except for a predecessor who died suddenly in office in 1970. Christopher Chope, a veteran Conservative lawmaker and Truss supporter, said the party was now a laughing stock. "The markets have lost trust in the Conservative Party - and who can blame them?"

☆ FTSE rallies on hopes of fiscal plan reversal
▼ + stars: | 2022-10-14 | by ( Sruthi Shankar | ) www.reuters.com time to read: +3 min

The blue-chip FTSE 100 (.FTSE) gained 0.9%, while the domestically focussed FTSE 250 (.FTMC) added 0.9%. Both indexes have recouped a large part of their losses this week but remain on track to record their fourth weekly decline in five. However, futures point to a weak start for U.S. stocks on Friday, with investors nervously awaiting quarterly reports from big Wall Street banks. read moreEmerging markets-focussed investment group Ashmore (ASHM.L) dipped 2.6% after reporting an $8 billion fall in assets under management for the September quarter. read moreRegister now for FREE unlimited access to Reuters.com RegisterReporting by Sruthi Shankar in Bengaluru; Editing by Savio D'SouzaOur Standards: The Thomson Reuters Trust Principles.

London CNN Business —UK Prime Minister Liz Truss will hold a news conference Friday amid widespread speculation that she’s getting ready to ditch a big part of her economic strategy unveiled just three weeks ago. Kwarteng flew back from the IMF meeting in Washington, D.C., on Friday for discussions with Truss about the plan. Under pressure, Kwarteng has already brought forward his full budget statement to Oct. 31, more than three weeks earlier than planned. But investors may not be prepared to wait that long for reassurance about the state of Britain’s public finances. — Luke McGee and Zahid Mahmood in London, and Xiaofei Xu in Paris contributed to this article

☆ Volatile sterling surges on reports of potential UK fiscal plan U-turn
▼ + stars: | 2022-10-13 | by ( Joice Alves | ) www.reuters.com time to read: +4 min

However, the central bank later officially reiterated that its programme of temporary gilt purchases will end on Oct. 14. UK pension schemes are racing to raise hundreds of billions of pounds to shore up derivatives positions before the BoE's Friday deadline. The yen "has lost its safe haven appeal," said Rodrigo Catril, a senior currency strategist at National Australia Bank. Investors were focusing on U.S. core inflation data due later, which is projected at 6.5% year-on-year in September. Minutes from the Federal Reserve's policy meeting last month showed that officials agreed they needed to raise interest rates to a more restrictive level - and then keep them there for some time - to meet their goal of lowering "broad-based and unacceptably high" inflation.

☆ Sterling volatile ahead of BoE deadline, fragile yen tests 1998 low
▼ + stars: | 2022-10-13 | by ( Joice Alves | ) www.reuters.com time to read: +4 min

LONDON, Oct 13 (Reuters) - Sterling rose on Thursday in volatile trade as investors awaited the impending deadline for the Bank of England to end an emergency bond-buying programme. Sterling was up 0.44% at $1.1147 at 1054 GMT in a volatile week. "We can expect potential market take-up to continue to increase as market participants prepare for the BoE to exit the market. Sterling volatilityElsewhere, the yen struggled against the U.S. dollar trading 0.1% lower at 146.8. Investors were focusing on U.S. core inflation data due later today, which is projected to rise 6.5% year-on-year in September.

A fragile yen languished near a fresh 24-year low, while markets were also on edge ahead of U.S. inflation data due later in the day for possible clues on how much higher the Federal Reserve will push interest rates. On Thursday, BoE saidUK pension schemes are racing to raise hundreds of billions of pounds to shore up derivatives positions before the BoE's Friday deadline. "We can expect potential market take-up to continue to increase as market participants prepare for the BoE to exit the market. Another currency struggling against the U.S. dollar was the yen , which traded 0.1% lower at 146.8. The yen "has lost its safe haven appeal," said Rodrigo Catril, a senior currency strategist at National Australia Bank.

☆ The Fed will 'probably break something', and more risks may need to be priced in as markets are fragile after an era of low rates and high liquidity, Mohamed El-Erian says
▼ + stars: | 2022-10-13 | by ( Jennifer Sor | ) www.businessinsider.com time to read: +3 min

The Fed will "probably break something" trying to bring down inflation, Mohamed El-Erian said. He pointed to the Fed's meeting minutes, which gloss over risks to market liquidity and functioning. "Markets are quite fragile after such a long period of zero interest rates and massive liquidity," he warned. "The Fed is so late, it will probably break something on the way to reducing inflation," El-Erian said. But El-Erian thinks markets need to price in even more risk.

"The chancellor will come to the despatch box," he said when asked by Sky News whether the corporation tax plan would definitely stay. Newspapers reported that some lawmakers who never wanted Truss to replace Boris Johnson as leader in the first place already wanted her out. "I think that changing the leadership would be a disastrously bad idea, not just politically but also economically, and we are absolutely going to stay focused on growing the economy," Cleverly said of Truss. But a fire-sale in the government bond market has driven up borrowing costs and mortgage rates and forced the Bank of England to intervene to protect pension funds. read moreMeanwhile, as Truss battled with the turmoil, she met King Charles for a weekly audience at Buckingham Palace between monarch and prime minister on Wednesday.

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