DIRS.INFO The most relevant business & tech news

☆ UK Pensions Regulator monitoring markets, welcomes BoE bond buying
▼ + stars: | 2022-09-28 | by ( ) www.reuters.com time to read: +1 min

LONDON, Sept 28 (Reuters) - Britain's Pensions Regulator is monitoring financial markets closely for their impact on the funding of defined benefit, or final salary, pension schemes, a spokesperson said on Wednesday. Pensions schemes have been heavily selling gilts in recent days after market falls caused by UK tax cut concerns triggered calls for collateral payments on the schemes' gilt derivatives positions, analysts and pensions advisers said. read more"We welcome steps announced by the Bank of England to restore orderly conditions through temporary purchases of long-dated UK government bonds," the Pensions Regulator spokesperson added. The regulator reiterated comments this week that the schemes and their advisers should review the resilience and liquidity of their investments, risk management and funding arrangements. read moreRegister now for FREE unlimited access to Reuters.com RegisterReporting by Carolyn Cohn Editing by Gareth JonesOur Standards: The Thomson Reuters Trust Principles.

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.

☆ Bank of England intervenes in bond market after historic sell-off
▼ + stars: | 2022-09-28 | by ( Elliot Smith | ) www.cnbc.com time to read: +1 min

LONDON — The Bank of England will suspend the planned start of its gilt selling next week and begin temporarily buying long-dated bonds in order to calm the market chaos unleashed by the new government's so-called mini-budget. In a statement Wednesday, the central bank said it was monitoring the "significant repricing" of U.K. and global assets in recent days, which has hit long-dated U.K. government debt particularly hard. "Were dysfunction in this market to continue or worsen, there would be a material risk to UK financial stability. "In line with its financial stability objective, the Bank of England stands ready to restore market functioning and reduce any risks from contagion to credit conditions for UK households and businesses." As of Wednesday, the bank will begin temporary purchases of long-dated U.K. government bonds in order to "restore orderly market conditions," and said these will be carried out "on whatever scale necessary" to soothe markets.

☆ 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.

☆ 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.

☆ 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.

☆ 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.

☆ Stocks pull off 2020 lows, Bank of England steps in to calm UK bond market
▼ + stars: | 2022-09-28 | by ( Amanda Cooper | Harry Robertson | ) 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. The BoE said it would temporarily buy long-dated bonds - linked most closely to workers' pensions and home loans - in light of a surge in 30-year bond yields above 5%, their highest since 2002. "The surge in bond yields threatens the housing market and broader economy. The MSCI All-World index was last down 0.5%, having pulled off a session trough that marked its lowest since November 2020. "The Bank of England is restoring some calm to the markets.

☆ 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.

☆ Breakingviews: BoE’s bond-buying U-turn is worth the risk
▼ + stars: | 2022-09-28 | by ( Neil Unmack | ) www.reuters.com time to read: +5 min

The fallout makes it even harder for Governor Andrew Bailey to convince markets he can tighten monetary policy. His decision on Wednesday to buy UK government debt and delay plans to sell down its 857 billion pound ($915 billion) bond portfolio carries big risks. Bailey’s goal is to cut holdings by 80 billion pounds over the next year. UBS analysts reckon issuance of gilts, after factoring in sales and redemptions from QT, will reach 355 billion pounds in the year ending March 2024. If Bailey can now tighten monetary policy without freaking out investors, his U-turn will have been worth the risk.

☆ Explainer: Why are Britain's pension schemes dumping gilts?
▼ + stars: | 2022-09-28 | by ( ) www.reuters.com time to read: +4 min

WHAT ARE DEFINED BENEFIT PENSION SCHEMES? Defined benefit (DB) pension schemes pay pensioners a fixed annual amount, often a proportion of the final salary they earned as employees. Register now for FREE unlimited access to Reuters.com RegisterThe pension schemes invest typically more than half of their assets in bonds, in order to pay pension liabilities decades into the future. To avoid being exposed to market volatility, the schemes typically hedge their positions through gilt derivatives managed by so-called liability-driven investment (LDI) funds. LDI funds also sold index-linked gilts to shore up the cash in their funds.

☆ 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.

☆ Wild UK market swings 'opportunity of a lifetime' for hedge funds
▼ + stars: | 2022-09-28 | by ( Nell Mackenzie | ) www.reuters.com time to read: +3 min

British pound coins are seen in front of displayed stock graph in this illustration taken, November 9, 2021. REUTERS/Dado Ruvic/IllustrationSept 28 (Reuters) - The wild swings seen in British markets provided an "opportunity of a lifetime" to trade currencies and bonds, hedge funds and traders said on Wednesday. The BoE said it would buy 65 billion pounds ($71 billion) of UK bonds as needed between now and Oct. 14 to stabilise markets. Taylor said he was short sterling and had been for most of the year. Year to date, hedge funds that trade on macroeconomic signals were up on average, 6.47% according to HFRX, a daily reporting index of hedge fund performance from HFR.

☆ Dow jumps 548 points as the Bank of England's intervention calms market panic over the UK's budget plans
▼ + stars: | 2022-09-28 | by ( Carla Mozée | ) www.businessinsider.com time to read: +3 min

US stocks climbed Wednesday, with the S&P 500 logging its first win in seven sessions. Oil prices rose and concerns about iPhone 14 demand weighed on Apple's stock. The Dow industrials and the S&P 500 were higher after six straight losses while the Nasdaq Composite rose for a second straight session. All 11 sectors on the S&P 500 gained ground, led by the energy group. Oil prices rose after US weekly crude stockpiles unexpectedly fell by 200,000 barrels.

At the International Monetary Fund's last count in the first quarter of this year, almost 5% of the world's foreign currency reserves were denominated in sterling - a total of $625 billion dollars worth of sterling and sterling assets on a crude calculation from the $12.55 trillion total. The UK has a reserve currency so it can always issue debt – it's just a question of the right price." But what if that reserve currency position is threatened and foreign central banks balk at holding so much sterling in their national savings stashes? Seven of the world's top 10 reserve holding central banks are in Asia or the Middle East. UBS chart on its 2022 survey of world reserve managersThe opinions expressed here are those of the author, a columnist for Reuters.

☆ Wall Street keeps selling as world assets fail to recover
▼ + stars: | 2022-09-27 | by ( Lawrence Delevingne | ) www.reuters.com time to read: +5 min

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., September 27, 2022. The Bank of England said late on Monday it would not hesitate to change interest rates and was monitoring markets "very closely." U.S. stocks mostly faltered after a morning bounce, with the S&P 500 hitting a two-year intraday low. The MSCI world equity index (.MIWD00000PUS) reversed early gains on Tuesday, falling about 0.3% to a near two-year low early Tuesday afternoon. MSCI's broadest index of Asia shares outside Japan (.MIAPJ0000PUS) hit a fresh two-year low and was flat on the day.

☆ It's just not the British pound that's getting pummeled. Bond yields in the UK are now trading at Global Financial Crisis levels
▼ + stars: | 2022-09-27 | by ( Brian Evans | ) www.businessinsider.com time to read: +2 min

UK bond yield traded at levels not seen since the global financial crisis on Tuesday. The two-year gilt's yield jumped as high as 4.761%, the most since 2008. Meanwhile, the UK's 30-year bond yields topped 5% for the first time since 2007. The two-year gilt's yield jumped as high as 4.761%, the most since 2008 and up from about 4.5% on Monday. Now the spread between five- and 30-year yields is the widest since 1997.

☆ Morning Bid: Eye of the storm
▼ + stars: | 2022-09-27 | by ( ) www.reuters.com time to read: +5 min

REUTERS/Shannon Stapleton TPX IMAGES OF THE DAYA look at the day ahead in U.S. and global markets from Mike Dolan. As Hurricane Ian raged and set its sights on Cuba and Florida, a global financial storm in bond and currency markets calmed moderately - though likely only temporarily. read moreRegister now for FREE unlimited access to Reuters.com RegisterFor all its potential destruction, Ian doesn't yet appear on the world markets radar. UK debt auctions this week will be watched very closely. But this may be the eye of the storm.

☆ Hedge fund manager who is up 145% this year says the British pound isn't done falling after hitting record low
▼ + stars: | 2022-09-27 | by ( Brian Evans | ) www.businessinsider.com time to read: +2 min

The British pound could fall further and reach parity with the US dollar, according to hedge fund manager Crispin Odey. His firm's flagship European hedge fund is up about 145%, mostly after shorting government bonds like British gilts. On Monday, the pound sterling hit an all-time low against the dollar of $1.035 but recovered somewhat to reach $1.067 on Tuesday. Odey's flagship European hedge fund is up about 145%, according to the FT, mostly after shorting government bonds like British gilts. Other firms have also profited from shorting the pound sterling.

☆ Markets are now treating UK bonds like Greek and Italian debt
▼ + stars: | 2022-09-27 | by ( Julia Horowitz | ) edition.cnn.com time to read: +6 min

The price of benchmark 10-year UK government bonds also increased slightly. “This is a situation where government borrowing costs — and therefore all our borrowing costs — are incredibly vulnerable,” economist Mohamed El-Erian, an adviser to Allianz, told the BBC on Tuesday. It will drive up import costs, adding to pressure on the Bank of England to hike interest rates faster and higher. Previously, markets were absorbing about £100 billion ($108 billion) in UK bonds annually, according to Ross Walker, chief UK economist at NatWest Markets. Yet higher borrowing costs will have consequences for both the government and households.

☆ Runaway dollar pauses for breath as bears stalk stocks
▼ + stars: | 2022-09-27 | by ( Xie Yu | ) www.reuters.com time to read: +3 min

Pound and U.S. dollar banknotes are seen in this illustration taken January 6, 2020. REUTERS/Dado Ruvic/IllustrationHONG KONG, Sept 27 (Reuters) - Asian markets attempted to stabilise on Tuesday after a wild few days of stumbling stocks, crumbling bonds, a plunging pound and soaring dollar, with the dollar easing a bit and stocks flat. S&P 500 futures rose 0.7%, and MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) fell 0.1%. After two weeks of mostly steady losses on the U.S. stock market, the Dow Jones Industrial Average (.DJI) confirmed on Monday that it was in a bear market, tracing its start to declines in early January. The dollar index on Tuesday eased 0.1% to 113.8, after earlier touching 114.58, its strongest against a basket of peer currencies since May 2002.

☆ Plunging pound pauses as investors await policy response
▼ + stars: | 2022-09-27 | by ( Tom Westbrook | ) www.reuters.com time to read: +3 min

On Friday and again on Monday the pound plunged, finding a record low of $1.0327 as investors question Britain's economic gambit of unfunded tax cuts to spur growth. Sterling has dropped 5% since Thursday and 21% this year against a backdrop of an ever stronger dollar. As the pound fell on Monday, the dollar surged to new highs on the euro and many more. "Everyone's got this hope that the dollar is peaking and peaking and peaking, but it's just been far too premature," said Paul Mackel, global head of FX research at HSBC in Hong Kong. China's yuan also hit a 2-1/2 year low on Monday and was steady at 7.1639 on Tuesday.

☆ 3 charts that show the UK's market meltdown
▼ + stars: | 2022-09-27 | by ( Jenni Reid | ) www.cnbc.com time to read: +2 min

A so-called "mini-budget" by the U.K.'s new government Friday has sparked a level of market volatility not seen in the country since the Covid crash or the Great Financial Crisis. It comes as inflation remains at 9.9% and the country has likely already entered a recession. The pound lost nearly 3.6% against the dollar Friday and continued to fall Monday when the market reopened. Yields on U.K. government bonds have rocketed following the government's budget — meaning their prices have fallen drastically (bond yields move inversely to prices). Soaring yields and a slumping pound have led some mortgage lenders to pause new home loans and withdraw certain mortgage offers.

☆ Sterling higher as BoE, Treasury seek to calm markets
▼ + stars: | 2022-09-27 | by ( Samuel Indyk | ) www.reuters.com time to read: +3 min

UK pound coins plunge into water coloured with the European Union flag colours in this illustration picture, October 26, 2017. The BoE "will not hesitate" to raise interest rates if needed to meet its 2% inflation target, governor Andrew Bailey said on Monday. "The BoE saying it won't change course has helped the recovery in sterling as it conveys a message that there's no sense of panic at the central bank," Cole added. "UK markets will now be hyper-sensitive to any communication from UK policymakers," said ING head of markets Chris Turner in a note. Pill voted with the majority to raise interest rates by 50 basis points at last week's policy meeting.

☆ Pound rebounds as traders turn to BoE response
▼ + stars: | 2022-09-27 | by ( Tom Westbrook | ) www.reuters.com time to read: +3 min

As the dollar eased, the pound rose 1% in Asia to $1.0805 and is up nearly 5% from Monday's low at $1.0327. The kiwi also rose 1%, its first gain in seven sessions, the euro rose 0.5% and the Aussie rose 0.7%. "More BoE rate hikes could only briefly boost the pound but not on a sustainable basis," said Gao. As the pound fell on Monday, the dollar surged to new highs on the euro and many more. The Aussie and kiwi hit 2-1/2 year lows on Monday and were due for a rebound, with the Aussie up 0.6% to $0.6500 and the kiwi up 1.2% to $0.5703.

Search resuls for: "Gilts"

25 mentions found