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"Were dysfunction in this market to continue or worsen, there would be a material risk to UK financial stability," the British central bank said. By 2:48pm (1348 GMT) it was trading down 0.5% at $1.0679, a fall of 12% in the last three months. The BoE said it would return to its plan to sell bonds and its launch was only postponed until the end of October. RESTORE ORDEROn Monday the BoE said it would not hesitate to raise interest rates and was monitoring markets "very closely". But the slide in bond prices continued unabated on Wednesday, prompting the BoE to make its move.

☆ Ryanair says no hit to UK bookings yet in wake of sterling fall
▼ + stars: | 2022-09-28 | by ( Conor Humphries | ) www.reuters.com time to read: +2 min

Register now for FREE unlimited access to Reuters.com RegisterRyanair often gains passengers from higher-cost rivals during economic downturns, he added. Economist Julian Jessop warned on Wednesday that Britain's economy could end up in a "doom loop" of a falling currency and rising interest rates. "That's not anything that's on the horizon, but we always have the ability to do that," he said. Unlike UK rivals, much of Ryanair's income is denominated in euros and the airline has hedged much of its dollar exposure for aircraft and fuel purchases, Wilson said. Register now for FREE unlimited access to Reuters.com RegisterWriting by Conor Humphries; editing by Jason Neely, Kirsten DonovanOur Standards: The Thomson Reuters Trust Principles.

☆ UK lenders pull mortgages at record rate as market chaos worsens
▼ + stars: | 2022-09-28 | by ( ) www.reuters.com time to read: +2 min

LONDON, Sept 28 (Reuters) - A record 935 mortgage products were pulled in Britain overnight, financial services provider Moneyfacts said on Wednesday, as deepening turmoil in financial markets pushed more lenders to temporarily withdraw products for new customers. The volatility comes after the new UK government announced huge tax cuts funded by borrowing, leading to a plunge in sterling and a surge in government bond yields as concerns mounted over its ability to fund the plan. read moreGovernment bond yields influence the cost lenders have to pay to borrow money. "We are seeing lenders across the market withdraw rates as headlines around interest rates soaring to 6% have spooked both lenders and borrowers," said Karen Noye, mortgage expert at wealth management firm Quilter. "Rates that were available one hour are gone the next which is making it a tricky time for buyers."

☆ Morning Bid: Mini budget, major turmoil
▼ + stars: | 2022-09-28 | by ( ) www.reuters.com time to read: +2 min

REUTERS/Henry NichollsA look at the day ahead in European and global markets from Anshuman DagaWhat was meant to be a mini-budget is still thundering across financial markets. read moreAsian stocks markets and currencies extended their downward journey, burdened by the gloomy growth outlook, while dollar bulls pushed the currency to yet another two-decade high. "Indeed a recession in Europe in particular is already well anticipated, with 92% of our European Fund Manager survey respondents expecting one in the coming 12 months," BofA said. Elsewhere, the energy crisis in Europe intensified as European authorities investigated what Germany, Denmark and Sweden said were attacks which had caused major leaks into the Baltic Sea from two Russian gas pipelines. The energy crisis between Europe and Moscow has already battered major Western economies, sent gas prices surging and sparked a hunt for alternative supplies.

Register now for FREE unlimited access to Reuters.com RegisterThe central bank said it would buy long-dated gilts "on whatever scale is necessary" to restore order to the market. Ahead of the BoE's decision, strategists said the 2.1 trillion-pound gilt market was seizing up, with very poor liquidity and pricing quality being a clear sign of market dysfunction. Twenty- and 30-year gilt yields - which move in the opposite direction to prices - dropped around 40 basis points on the day after they rose above 5% in early trading - the highest level for 30-year yields since 2002. The 30-year benchmark gilt yield was trading at 4.579%, down 41 basis points on the day, at 1136 GMT. Capital Economics, a consultancy, said the sharp drop in gilt yields suggested the BoE's plan was already working.

☆ Morning Bid: Gimme Shelter
▼ + stars: | 2022-09-28 | by ( ) www.reuters.com time to read: +4 min

A look at the day ahead in U.S. and global markets from Mike Dolan. read moreBut with the pound falling anew against the dollar on the credit rating and IMF warnings, the real problem is in UK government bonds, or gilts. read moreWith Wall Street stocks hitting a new low for the year on Tuesday, global shares sank to two-year lows on Wednesday. Fed chairman Jerome Powell and a host of other Fed speakers are in the diary again for later on Wednesday. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

"Were dysfunction in this market to continue or worsen, there would be a material risk to UK financial stability," the central bank said in a statement that immediately eased pressures on soaring British government bond yields. The Bank of England said on Monday it would not hesitate to raise interest rates and was monitoring markets "very closely". Earlier on Wednesday 30-year British government bond yields rose above 5% for the first time since 2002. "An irresponsible, destructive fiscal policy." In his remarks on Tuesday, BoE Chief Economist Pill said financial market upheaval would have a big impact on the economy and would be factored into the Bank's next forecasts.

☆ Pound drops more than 1% as Bank of England steps into bond market
▼ + stars: | 2022-09-28 | by ( Harry Robertson | ) www.reuters.com time to read: +3 min

LONDON, Sept 28 (Reuters) - Sterling fell more than 1% against the dollar and euro on Wednesday after the Bank of England said it would step in to calm the UK's frenzied bond markets. The Bank said it will carry out temporary purchases of bonds and postpone the planned start of its gilt sale programme. The Bank's dramatic move came after a morning of disorder in the gilt market. The yield on the 30-year benchmark gilt fell by more than 50 basis points at one point. "Overall we would favour a little more sterling stability on today's intervention, but market conditions remain febrile," Turner said.

☆ Bank of England to buy 65 billion pounds of UK bonds to stem rout
▼ + stars: | 2022-09-28 | by ( David Milliken | ) www.reuters.com time to read: +4 min

Citing potential risks to UK financial stability, the BoE also said it would delay the start of a programme to sell down its 838 billion pounds ($891 billion) of government bond holdings, which had been due to begin next week. "Were dysfunction in this market to continue or worsen, there would be a material risk to UK financial stability," the BoE said. "This would lead to an unwarranted tightening of financing conditions and a reduction of the flow of credit to the real economy." "There are schemes running out of cash at the moment," one pensions consultant said before the BoE intervention. The BoE's intervention reduced long-dated bond yields back to their level at the end of Friday - after the initial negative reaction to Kwarteng's statement - but shorter-dated yields were still higher.

☆ Euro zone yields fall from multi-year highs tracking UK gilts
▼ + stars: | 2022-09-28 | by ( Stefano Rebaudo | ) www.reuters.com time to read: +3 min

Sept 28 (Reuters) - Euro zone borrowing costs fell on Wednesday, tracking moves in British gilts, after hitting multi-year highs amid monetary tightening expectations and concerns about potentially growing bond supply due to more public spending. The euro area bond market has recently trailed yields in British gilts, which recorded their sharpest rise in decades in response to new finance minister Kwasi Kwarteng's tax cuts and borrowing plans. The German yield curve steepened after being close to inversion last week, with the gap between 2- and 10-year yields hitting an almost 3-week high of 42.7 bps. The jump of yields in British gilts also widened yield spreads between core and peripheral government bonds. gilt&spreadItaly's 10-year bond yield was down 13 bps to 4.6%, after hitting its highest since February 2013 at 4.927%, with the spread between Italian and German 10-year yields tightening to 243 bps.

☆ UK finance minister Kwarteng not resigning, no reversal in policy -Treasury source
▼ + stars: | 2022-09-28 | by ( ) www.reuters.com time to read: 1 min

LONDON, Sept 28 (Reuters) - British finance minister Kwasi Kwarteng is not resigning and there will be no reversal of policy, a Treasury source said on Wednesday, confirming an earlier report by Sky News political editor Beth Rigby. Kwarteng's tax cut plans, on top of an energy bill bailout, all funded by a huge increase in government borrowing, have triggered financial market chaos. read moreRegister now for FREE unlimited access to Reuters.com RegisterReporting by Liz Piper, Writing by Kylie MacLellan, editing by William JamesOur Standards: The Thomson Reuters Trust Principles.

"We are really a government in waiting and we have a chance to set out our ideas for the country. Labour is positioning itself as the party of fiscal responsibility and say it stands for "sound money". Almost half of voters say that Labour has not produced a clear set of policy ideas, according to polling from Savanta ComRes. In the most recent poll, Labour now has a six-point lead. But Curtis said the Conservatives still lead on the crucial question about who is best placed to make voters and the country wealthier.

☆ Former Bank of England official slams ‘really stupid’ UK government decisions
▼ + stars: | 2022-09-28 | by ( Julia Horowitz | ) edition.cnn.com time to read: +3 min

London CNN Business —Former Bank of England Deputy Governor Charlie Bean said the central bank will almost certainly announce an emergency interest rate hike before its next scheduled meeting in November, predicting that turmoil would continue to roil UK markets. Investors have lost faith in the government’s ability to manage the economy and public finances, he said, commenting on a market crash sparked by the UK government’s plan to slash taxes and boost borrowing in the face of high inflation. “Sterling and UK government bonds look vulnerable at the moment, and if there is another bout of significant downward pressure, I think the bank really will have to act,” Bean told CNN Business. “The bank is between a rock and a hard place here, because the real issue obviously is fiscal policy,” Bean said. “They might do these sorts of things for an emerging market country that has been on the edge for a while.”

☆ UK house prices could plunge 15% because of soaring mortgage rates
▼ + stars: | 2022-09-28 | by ( Anna Cooban | ) edition.cnn.com time to read: +3 min

London CNN Business —House prices in the United Kingdom could plummet by as much as 15% if the country presses ahead with its tax-slashing economic gamble. Credit Suisse (AMJL) said on Tuesday that UK house prices could “easily” fall between 10% and 15% over the next 18 months if the Bank of England aggressively hikes interest rates to keep inflation in check. Some analysts now expect the Bank of England to raise interest rates to 6% next year, up from its current 2.25%, to prop up the ailing currency. Capital Economics, which likewise forecasts a drop in house prices of between 10% and 15%, warned the slump could be “devastating.”“The resulting drop in buying power makes a significant drop in house prices inevitable,” Andrew Wishart, senior economist at Capital Economics, said in a research note on Tuesday. “Mortgage arrears and default would rise just as house prices likely would be tumbling, placing huge strain on banks’ balance sheets,” Tombs said.

☆ Behind Britain’s self-inflicted financial crisis: podcast
▼ + stars: | 2022-09-28 | by ( Aimee Donnellan | ) www.reuters.com time to read: 1 min

LONDON, Sept 28 (Reuters Breakingviews) - Sterling fell to a record low and gilt yields soared after finance minister Kwasi Kwarteng unveiled a raft of unfunded tax cuts. In this Viewsroom podcast, Breakingviews columnists explain the long-term damage to the UK’s credibility and what will rebuild investors’ confidence. Listen to the podcastFollow @aimeedonnellan on TwitterRegister now for FREE unlimited access to Reuters.com RegisterEditing by Oliver Taslic and Streisand NetoOur 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.

London CNN Business —One of the world’s leading multilateral financial institutions has joined a chorus of criticism of huge tax cuts announced by the UK government last week that sent the pound plunging to a record low. In a rare and stinging rebuke for such a large developed economy, the International Monetary Fund warned that the tax cuts — the biggest in Britain since the early 1970s — would likely increase inflation and inequality. “We understand that the sizable fiscal package announced aims at helping families and businesses deal with the energy shock and at boosting growth via tax cuts and supply measures,” an IMF spokeperson said. UK finance minister Kwasi Kwarteng has shown no signs of backing down, despite the market crash. Yields on 10-year UK government bonds fell sharply after the Bank of England’s announcement on Wednesday but remain elevated.

☆ Explainer: Why is Bank of England acting again? What next in the UK crisis?
▼ + stars: | 2022-09-28 | by ( ) www.reuters.com time to read: +5 min

A general view of the Bank of England (BoE) building, the BoE confirmed to raise interest rates to 1.75%, in London, Britain, August 4, 2022. WHY IS THE BANK OF ENGLAND BUYING BONDS AGAIN? By buying bonds, the BoE is seeking to reverse what it sees as "dysfunction" in the bond market. Specifically, the central bank was seeking to address problems facing pension funds, a source familiar with the decision said. By temporarily acting as a buyer for the bonds, the BoE aims to prevent panic selling.

☆ Billionaire investor Ray Dalio says UK’s economic plan 'suggests incompetence'
▼ + stars: | 2022-09-28 | by ( Hannah Ward-Glenton | ) www.cnbc.com time to read: +1 min

Ray Dalio, founder of Bridgewater Associates LP, speaks during a panel session on day three of the World Economic Forum (WEF) in Davos, Switzerland, on Wednesday, May 25, 2022. The financial market turmoil resulting from the U.K. government's spending plan "suggests incompetence," according to billionaire investor Ray Dalio. "I can't imagine that this is intended – and if it's not intended then it's an understanding question," Dalio said on BBC Radio 4′s "Today" program Wednesday. The measures included large swathes of unfunded tax cuts that have drawn global criticism, including from the International Monetary Fund. "It doesn't stimulate the economy, productivity is what stimulates the economy over the long run," Dalio said.

☆ Sterling drops against dollar as Bank of England intervenes in bond market
▼ + stars: | 2022-09-28 | by ( Harry Robertson | ) www.reuters.com time to read: +3 min

It was on track for its biggest monthly fall against the dollar since the financial crisis in autumn 2008, having shed almost 9% in October alone. The Bank said it had seen "dysfunction" in the market for long-dated gilts and that it would buy as many as necessary to rectify the situation. Ratings agency Moody's also weighed in on Tuesday, saying the unfunded tax cuts were "credit negative" and likely to weigh on growth. "This move from the Bank of England won't stem moves against the UK debt and currency markets on their own," said Mike Owens, global sales trader at Saxo Markets. "While this is welcome, the fact that it needed to be done in the first place shows that the UK markets are in a perilous position," said Paul Dales, chief UK economist at Capital Economics.

☆ Blackstone’s Schwarzman kickstarts UK asset grab
▼ + stars: | 2022-09-28 | by ( ) www.reuters.com time to read: +2 min

LONDON, Sept 28 (Reuters Breakingviews) - Britain’s currency crisis may have an upside after all – at least for foreign investors. Blackstone’s (BX.N) Steve Schwarzman is paying 80 million pounds for 17th-century country estate Conholt Park, the City A.M. newspaper reported. But it’s exactly the kind of purchase that will make more sense the lower the pound goes. And to the extent that future cash flows are denominated in dollars or euros, the sterling purchase price should rise. U.S. investors just bought Chelsea soccer club, while Saudi Arabia’s sovereign wealth fund last year swooped on rival Newcastle United.

☆ UK's Kwarteng tells bankers: we are committed to fiscal discipline
▼ + stars: | 2022-09-28 | by ( ) www.reuters.com time to read: +1 min

LONDON, Sept 28 (Reuters) - British finance minister Kwasi Kwarteng told investment bank executives on Wednesday that the government was committed to fiscal discipline and that he was working closely with the Bank of England and budget forecasters. The statement made no reference to market turmoil or the Bank of England's surprise intervention in bond markets earlier on Wednesday. The Treasury said the meeting was part of a series of roundtables ahead of a planned financial services deregulatory package next month. "Ahead of the upcoming Big Bang 2.0 deregulatory moment for financial services, the Chancellor discussed potential sectoral reforms that are targeted at boosting growth, generating investment, and delivering higher wages across the UK. "The Chancellor reiterated his view that 'a strong UK economy has always depended on a strong financial services sector.'"

☆ Record number of UK mortgage deals pulled in one day as market mayhem takes hold
▼ + stars: | 2022-09-28 | by ( Sophie Kiderlin | ) www.cnbc.com time to read: +2 min

Overall, 935 mortgage products were pulled from the market on Tuesday, according to data from money comparison site Moneyfacts. LONDON – Hundreds of residential mortgage deal offers in the U.K. have been pulled after market chaos sparked concerns about base rates rising as high as 6% next year. Overall, 935 mortgage products were pulled from the market on Tuesday, according to data from money comparison site Moneyfacts. HSBC and Santander are the latest major U.K. lenders to pause their mortgage product offering, while NatWest repriced their products, increasing rates. Earlier in the week, Virgin Money, Halifax and Skipton Building Society temporarily pulled some of their mortgage deals citing market developments.

☆ Sterling slips after IMF and Moody's rebuke Britain over tax plans
▼ + stars: | 2022-09-28 | by ( Harry Robertson | ) www.reuters.com time to read: +3 min

LONDON, Sept 28 (Reuters) - Sterling resumed its fall on Wednesday after the International Monetary Fund (IMF) and ratings agency Moody's scolded Britain over its new spending plans. The pound was down 0.56% to $1.068 with renewed dollar strength also weighing on the currency. Sterling tumbled to an all-time low against the dollar of $1.0327 on Monday as investors dumped UK assets after finance minister Kwasi Kwarteng unveiled plans to slash taxes and ramp up borrowing. Ratings agency Moody's said the unfunded tax cuts were "credit negative" and were likely to weigh on growth. UK pound coins plunge into water coloured with the European Union flag colours in this illustration picture, October 26, 2017.

☆ UK source dismisses report Kwarteng will ask banks not to bet against sterling
▼ + stars: | 2022-09-28 | by ( ) www.reuters.com time to read: 1 min

LONDON, Sept 28 (Reuters) - A source at Britain's finance ministry dismissed a Sky News report that finance minister Kwasi Kwarteng would ask financiers not to bet against the pound during a meeting with bankers on Wednesday. The Treasury did not immediately have an on-the-record comment on the report. Register now for FREE unlimited access to Reuters.com RegisterReporting by William James and Elizabeth Piper, editing by David MillikenOur Standards: The Thomson Reuters Trust Principles.

☆ JPMorgan doubles down on UK retail bank Chase
▼ + stars: | 2022-09-27 | by ( Iain Withers | ) www.reuters.com time to read: +4 min

JPMorgan said it had attracted one million customers and more than 10 billion pounds ($10.8 billion) of deposits to its UK mobile app bank since its launch last September. read more"We want to be international, starting with the UK," Sanjiv Somani, UK chief executive of Chase, said in an interview at the bank's UK headquarters in Canary Wharf in London on Friday. The retail banking revenue pool is in the trillions, even outside the U.S."He declined to say where Chase might launch next. Somani started his career in retail banking in India helping Citi launch a much simpler version of a 'digital bank' - one that would text you your bank balance. Germany's N26 quit the country after just two years, while Citi axed its UK retail bank last week.

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