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☆ Markets are losing retail traders, that's bad for stock prices
▼ + stars: | 2022-10-21 | by ( Nicole Goodkind | ) edition.cnn.com time to read: +8 min

Daily average trades at companies like TD Ameritrade (AMTD) and Charles Schwab (SCHW) spiked to new highs in March 2020 and again in January 2021 and February 2021. The number of daily retail trades at Morgan Stanley fell more than 15% over the third quarter from a year earlier, to 805,000 trades a day. In Februrary 2021, Interactive Brokers registered an average of 3.7 million daily retail trades. Recent search trends on Google also show a drop in interest in the stock market. The Investor Movement Index (IMX), created by TD Ameritrade to indicate the sentiment of retail investors, fell by 7.26% during the September period.

Prime Minister Liz Truss announces her resignation at 10 Downing Street on October 20, 2022 in London, England. Leon Neal | Getty ImagesLONDON — U.K. Prime Minister Liz Truss resigned Thursday following a failed tax-cutting budget that rocked financial markets and which led to a revolt within her own Conservative Party. "I recognize though, given the situation, I cannot deliver the mandate on which I was elected by the Conservative Party. I have therefore spoken to His Majesty the King to announce that I am resigning as leader of the Conservative Party." The number who have written letters to Brady expressing no confidence in the prime minister was reported to be over 100 by Thursday.

☆ Soaring food prices push UK inflation back to 40-year high
▼ + stars: | 2022-10-19 | by ( ) www.reuters.com time to read: +1 min

LONDON, Oct 19 (Reuters) - The biggest jump in food prices since 1980 pushed British inflation back into double digits last month, matching a 40-year high hit in July in a new blow for households grappling with the cost-of-living crisis. The Office for National Statistics said the consumer price index (CPI) increased by 10.1% in annual terms in September. Hotel prices also increased in September, the ONS said. "Today's release highlights the danger that underlying inflation remains strong even as the economy weakens," said Paul Dales, chief UK economist at consultancy Capital Economics. He pointed to rising core inflation, a measure that excludes volatile food and energy prices, which hit a new 30-year high of 6.5%.

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.

☆ Liz Truss was defeated by the bond market. Investors aren’t satisfied yet
▼ + stars: | 2022-10-14 | by ( Julia Horowitz | ) edition.cnn.com time to read: +5 min

London CNN Business —After a bruising three-week battle with bond markets, UK Prime Minister Liz Truss admitted defeat on Friday. The price of 30-year UK government debt, which has been whipsawed in recent weeks, fell after the press conference. The Bank of England was forced to announce three separate interventions to avoid a full-scale meltdown in the UK government bond market. That’s putting investors on edge, especially since more details on the revised Truss plan aren’t formally expected until Oct. 31. Global dynamics could also make it more difficult for UK markets to find their footing even as the government backtracks.

☆ UK brings budget forward in another attempt to reassure markets
▼ + stars: | 2022-10-10 | by ( Hanna Ziady | ) edition.cnn.com time to read: +3 min

Kwarteng announced the Oct. 31 date in a letter to the Treasury on Monday, pulling his midterm budget forward by more than three weeks in an attempt to reassure rattled markets and rebellious party colleagues. He also confirmed that the Office for Budget Responsibility (OBR), the independent fiscal watchdog, will publish its assessment of the budget on the same day. Investors have been awaiting clarity on a revised date for the budget, which was initially set for November 23. It was widely expected to be brought forward after Kwarteng’s “mini” budget on Sept. 23 crashed the pound and sent shockwaves through financial markets with its promise of £45 billion ($49.8 billion) of unfunded tax cuts. The pound has recovered all of its losses but UK government bond yields remain higher than they were before the crash.

☆ The UK is gripped by an economic crisis of its own making
▼ + stars: | 2022-09-29 | by ( Mark Thompson | ) edition.cnn.com time to read: +8 min

“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, commenting on the bank’s intervention. “It wouldn’t be a huge surprise if another problem in the financial markets popped up before long,” Dales added. The UK government should also postpone its tax cuts, El-Erian said. We look like reckless gamblers who only care about the people who can afford to lose the gamble,” one former Conservative minister told CNN. “Truss and Kwarteng are now facing a severe economic crisis as the world’s financial markets wait for them to make policy changes that they and the Conservative party will find unpalatable,” the Eurasia analysts wrote.

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.

☆ 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.

☆ Sterling sinks to new low as 'mini budget' hits investor faith in UK markets
▼ + stars: | 2022-09-26 | by ( Amanda Cooper | ) www.reuters.com time to read: +4 min

read moreOn Friday, he announced that he would cut a raft of taxes, but he did not detail how the government would fund it. , read moreIn light of the rout, strategists and economists said the Bank of England needs to do something to calm markets and restore credibility. The FTSE 100 (.FTSE) was roughly flat on the day, while the domestically focussed FTSE 250 (.FTMC) fell 1%. '1980S ON STEROIDS'Paul Dales, Capital Economics chief UK economist, said the central bank needed to take action. "The market is now treating the UK as if it's an emerging market.

☆ Bank of England tries to calm panicked markets
▼ + stars: | 2022-09-26 | by ( Julia Horowitz | ) edition.cnn.com time to read: +2 min

London CNN Business —UK policymakers are trying to calm markets after a plan by Prime Minister Liz Truss to cut taxes while ramping up borrowing sparked panic among investors worried it could feed inflation and destabilize government finances. The UK pound has plunged and government bonds have collapsed since Truss and Kwarteng revealed their economic program on Friday. It’s intended to spur economic growth, but has fed alarm among investors, who are worried about the unorthodox approach. “It remains to be seen whether today’s statement by the government and the Bank of England will be enough to ease the markets’ fears about the government’s fiscal policy,” said Paul Dales, chief UK economist at Capital Economics. “The initial reaction in the markets, with the pound falling again after it regained some ground, suggests that the issue may not be put to bed yet.”

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. REUTERS/Maja Smiejkowska/File PhotoLONDON, Sept 26 (Reuters) - Bank of England Governor Andrew Bailey said on Monday that the BoE "will not hesitate" to raise interest rates if needed to meet its 2% inflation target, and that it was watching financial markets "very closely" following sharp moves in asset prices. "The Bank is monitoring developments in financial markets very closely in light of the significant repricing of financial assets," Bailey said in a statement. However, traders viewed the BoE statement has decreasing the likelihood of a move before the BoE's next scheduled rate announcement on Nov. 3. Sterling fell more than a cent against the dollar and interest rate swaps for one week ahead priced in substantially lower rates than immediately before.

☆ Pound to dollar: The pound's crash will make inflation worse
▼ + stars: | 2022-09-26 | by ( Julia Horowitz | ) edition.cnn.com time to read: +7 min

Consequently, the Bank of England will come under pressure to jack up interest rates further and faster. It has been sharply critical of the UK government’s proposals. Why a plunging pound is bad newsThe pound hit a record low against the dollar on Monday, dropping near $1.03 before recovering to almost $1.07. Investors expect the Bank of England will need to increase interest rates much more aggressively to get inflation in check. The central bank has given no indication it will hike interest rates outside its normal schedule of meetings.

☆ The pound’s crash will make inflation worse and push interest rates higher
▼ + stars: | 2022-09-26 | by ( Julia Horowitz | ) edition.cnn.com time to read: +7 min

Consequently, the Bank of England will come under pressure to jack up interest rates further and faster. It has been sharply critical of the UK government’s proposals. Investors expect the Bank of England will need to increase interest rates much more aggressively to get inflation in check. The central bank has given no indication it will hike interest rates outside its normal schedule of meetings. “If markets still don’t have faith in the fiscal picture, I’m not sure how the Bank of England wins this,” Rossiter said.

☆ Reactions: Britain's pound crumbles to record lows in firesale of UK assets
▼ + stars: | 2022-09-26 | by ( ) www.reuters.com time to read: +8 min

Wads of British Pound Sterling banknotes are stacked in piles at the Money Service Austria company's headquarters in Vienna, Austria, November 16, 2017. REUTERS/Leonhard Foeger/File PhotoLONDON, Sept 26 (Reuters) - Britain's pound plunged to record lows on Monday and bonds were slammed for a second day, as investors punished UK assets after the government's mini-budget announcement last week. The presentation of the mini-budget was received quite badly by the markets – sterling literally collapsed. The significant tax cuts announced by the Treasury Secretary cause concerns for the currency markets because of rising government debt." One is the loss of confidence in UK fiscal policy and that won't help sterling.

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