Closing post
Time to wrap up….(just one more sleep until Budget day!)
Here’s today’s main stories:
Back in the US, the number of job openings has fallen as layoffs increased, signalling a slowdown in the labor market.
The latest JOLTS report shows there were 7.44 million available work positions at the end of September, down from 7.81 million at the end of August.
That’s the lowest reading since early 2021.
Job openings fell in September and were revised down for August, putting the 3-month moving average at its lowest level since the reopening in Spring 2021.
— Nick Timiraos (@NickTimiraos) October 29, 2024
There were fewer than 1.1 posted job vacancies for every worker counted as unemployed in September. pic.twitter.com/eM3PlIhJds
EU adopts extra tariffs on Chinese EVs
The EU has announced it will press ahead with tariffs of up 45% on Chinese-made electric vehicles this week after talks with Beijing failed to reach a resolution of the dispute over subsidise cars, my colleague Lisa O’Carroll reports from Dublin.
The tariffs are expected to come into force on Thursday with a top rate of 35.3% slapped on top of vehicles produced by Chinese company SAIC, owner of brands including MG, on top of the existing 10% tariff in imports into the EU.
The decision will become law after publication in the EU’s official journal on Wednesday and will then enter into force from Thursday.
Chinese firms BYD which has launched the Seal and Dolphin brands in Europe will pay lower additional duties of 17% and 18.8%, respectively.
The move is likely to intensify a trade war with China already imposing tariffs on Brandy with investigations opened by Beijing into dairy and pork exports from the EU.
The decisions in tomorrow’s budget could mean that UK debt issuance this financial year is the second largest ever.
Bond dealers are expecting Rachel Reeves to push UK government bond issuance towards £300bn this fiscal year, a roughly 6% increase on the existing target, a Reuters poll has found.
The median forecast among banks that can bid directly at government bond auctions - known as primary dealers - was for gilt issuance of £295bn this financial year, up from £277.7bn under the current plans.
If the Debt Management Office (DMO) sells that many gilts in 2024/25, it would be the second-heaviest year for issuance on record, after the 2020/21 financial year when Britain was hit by the Covid-19 pandemic, Reuters reports.
Much of that debt issuance will be to cover existing bonds which mature this year (and thus need to be rolled over), rather than additional borrowing.
Reuters’ poll found that Britain’s headline budget deficit is likely to end this financial year at around £106bn, ahead of March’s forecast of £87.2bn.
Updated
Adidas reaches out-of-court settlement with rapper Ye
After years of legal wrangling, Adidas has reached an out-of-court settlement with rapper Ye to end all legal proceedings between them.
The sportswear brand announced the agreement with the rapper previously known as Kanye West today, adding that no money changed hands in the agreement.
CEO Bjørn Gulden told reporters on a conference call:
“There isn’t any more open issues, and there is no... money going either way, and we both move on….
“There were tensions on many issues, and... when you put the claims on the right side and you put the claims on the left side, both parties said we don’t need to fight anymore and withdrew all the claims.
Adidas cut its ties with Ye two years ago, when it said it “does not tolerate antisemitism” after the rapper was suspended from Instagram and Twitter over offensive posts.
A year later, Gulden lamented the end of the lucrative partnership, saying, “I don’t think he meant what he said.”
According to the Financial Times, today’s agreement means Adidas has received a boost of around €100m to its operating profit after it unwound a previous provision related to the case.
Gulden said that the group would donate to charity an amount equal to its unwound €100m provision, the FT adds.
Updated
Gold hits fresh record high, bitcoin also higher
The gold price has hit a fresh alltime high, lifted by US election uncertainty and expectations of interest rate cuts.
The spot price of gold has risen to $2,766.52 per ounce, above the previous high set last week, meaning gold has now climbed by a third so far this year.
Tito Iakopa, commercial director at fintech company FlowCommunity, expains:
Gold prices benefited from robust safe-haven demand amid persistent geopolitical tensions, expectations of monetary policy easing, and mounting uncertainty surrounding the US presidential election.
These fundamental factors, combined with strong physical demand, continue to provide support for gold as elevated global risks push prices higher.
#Gold hits a fresh record at $2764 even as the dollar and yields move higher, highlighting its exceptional strength as #USElection2024 nerves continue to take centre stage
— Ole S Hansen (@Ole_S_Hansen) October 29, 2024
Bitcoin is also rallying today, rising above the $70,000 mark for the first time since June. Bitcoin is currently up 3.3% to $71,900, not far from its record high around $73,800 set in March.
Both gold and bitcoin are seen as providing safety from money-printing governments, and from inflation.
Chris Weston, head of research at Pepperstone, says fears of currency debasement are rising:
The fact that we see gold and crypto moving concurrently with a rising US dollar, higher US real rates and nominal US Treasuries, is a clear red flag.
It tells us that the market is becoming progressively concerned, not just with the debt dynamics in the US, but in Japan threats of a new supplementary budget, when the fiscal deficit is already running at 6% of GDP, and the BoJ has cut back on bond buying, could be an issue.
In China, federal government debt levels may be comparatively low relative to many Western government levels, but authorities there are about the break away from their imposed fiscal limits and increase spending to raise animal spirits.
Updated
Full story: Jeremy Hunt calls on government not to release OBR review into his spending plans
Rachel Reeves has hit back at Jeremy Hunt, over his attempt to stop the publication of the OBR’s report into his spending plans as chancellor.
During Treasury questions in parliament, Reeves suggested her predecessor was trying to hide from scrutiny, saying:
“It is important that we don’t deny the seriousness of the situation we face. With the black hole in the public finances, combined with lashing out at independent economic institutions, suggests that he has got more in common with Liz Truss and Kwasi Kwarteng than perhaps we thought”.
“I watched my party lurch towards an ideological extreme and deny reality, and as a result we spent years in opposition. The shadow chancellor risks taking his party down the same path.”
Updated
House price growth across the US has slowed.
Prices rose at an annual rate of 4.2% in August, according to the S&P CoreLogic Case-Shiller U.S. National Home Price Index, down from 4.8% in July.
On a monthly basis, prices dipped by 0.1%.
Case-Shiller's 20-city adjusted index rose 0.4 percent on the month in August, seasonally adjusted, while the unadjusted annual rate of increase eased yet again to 5.2 percent in August from 5.9 percent in July, 6.5 percent in June and 6.9 percent in May. pic.twitter.com/SNuSgH3z48
— Econoday, Inc. (@Econoday) October 29, 2024
A narrower index, tracking 20 large US cities, shows prices rose by 5.2% in the year to August – lead by New York (+8.1%), Las Vegas (+7.3%) and Chicago (7.2%), while Denver lagged at the back with just 0.7% growth.
Pfizer has raised its full-year profit and revenue forecasts, pointing to higher-than-expected demand for its antiviral Covid-19 treatment Paxlovid and its Covid vaccine Comirnaty.
The US pharmaceutical giant lifted its 2024 revenue forecast to between $61bn and $64bn and its earnings per share estimate to between $2.75 and $2.95. It has struggled with a sharp drop in revenues from its Covid jab and antiviral pill Paxlovid since the pandemic, but demand far outstripped expectations in the latest quarter.
Chief executive Albert Bourla highlighted “exceptional demand” for the New York-based drugmaker’s cancer drugs, and said the firm had “delivered on heightened demand for Paxlovid during the recent Covid-19 wave”.
The drug brought in $2.7bn of revenue in the third quarter, compared with analysts’ expectations of $456m, while the Comirnaty jab, which Pfizer makes with its German partner BioNTech, generated quarterly sales of $1.4bn, far ahead of forecasts of $870m.
Overall, third-quarter sales grew by 31% to $17.7bn, and by 14% excluding Covid products.
Bourla added:
“The demand for Paxlovid seems to have stabilised at the current levels and appears to be closely correlated with each wave of Covid-19.”
The company is under pressure from the activist investor Starboard Value, a New York-based hedge fund founded in 2002, and has done two rounds of cost cutting to save $5.5bn by 2027, as well as deals, such as the $43bn acquisition of cancer specialist Seagen last year.
Pfizer shares have risen more than 3% in pre-market trading.
Back in the bond market, US government debt is weakening in value.
With prices falling a little today, the yield on 10-year US Treasury bonds has risen to 4.32% from 4.28% last night, a rise of 4 basis points.
That’s its highest level since early July.
The 10 year yield breaks 4.3% overnight 💀 pic.twitter.com/mYENSUM4PU
— QE Infinity (@StealthQE4) October 29, 2024
US Treasury prices have been hit by fears that US interest rates may not be cut as quickly as expected, due to sticky inflation.
UK bond yields are rising a little higher too, with German and French debt also weakening….
Updated
The Uk government has pushed back against former chancellor Jeremy Hunt’s complaints that the Office for Budget Responsibility (OBR) will publish its review of his spending plans on the same day as the Budget, tomorrow.
Asked if the OBR was being used as a political tool, following Hunt’s criticism (see earlier post), Sir Keir Starmer’s spokesman told reporters:
“No, the Prime Minister is clear that this Government is going to back the independent OBR, not trash it.
“The answer is not to blame the referee, face up to the challenges we faced and be honest about the trade-offs and choices the Government face, not pretend they don’t exist.
“That’s why the Government is strengthening the OBR through the Budget Responsibility Act to ensure that it’s never sidelined again, like we saw during the mini budget.
“The Government has been up front about the black hole of the nation’s finances and it fully backs the OBR and the independent scrutiny it provides.”
Santander UK delays results as it considers landmark car loan ruling
Santander UK has delayed the release of its third-quarter results at the last minute as it scrambles to review last week’s landmark court judgment into car finance misselling that some analysts say could cost the lender £1.1bn.
The bank was scheduled to release its latest quarterly earnings report on Tuesday morning, alongside those of its Spanish parent company, Banco Santander. The British arm, however, announced on Monday evening that it was withholding its report while it reviewed Friday’s court of appeal ruling into commission payments on car loans.
The judgment, which said it was unlawful for lenders to have paid a commission to car dealers without the borrowers’ knowledge, could influence an ongoing investigation by the Financial Conduct Authority and ultimately force lenders such as Santander to pay customers billions of pounds in compensation.
It said:
“It is not practicable to reliably estimate at this point in time the extent of any potential financial impact.
However, Santander UK Group Holdings plc is taking time to consider the judgment and the potential exposure it creates for the Santander UK Group.”
Fast food chain McDonald’s has reported a drop in sales in the last quarter, driven by weaker demand outside America.
Fresh from giving president Trump a “shift” last week, McDonald’s has reported a 1.5% drop in global comparable sales for the third quarter of the year.
Although sales in the US rose by 0.3%, sales fell in international markets such as France, the UK and China, while “the continued impact of the war in the Middle East” also hit sales.
McDonald’s CEO Chris Kempczinski says:
“We will stay laser-focused on providing an unparalleled experience with simple, everyday value and affordability that our consumers can count on as they continue to be mindful about their spending.
“McDonald’s will continue to follow our Accelerating the Arches playbook to drive long-term growth globally and win in this environment.”
McDonald’s was hit by an E coli outbreak in the US earlier this month, with report suggesting that fresh onions are the most likely source of the bacteria.
More than 1,000 Ford administrative staff to strike tomorrow
More than 1,000 Ford employees are to go on strike tomorrow, in a dispute about pay and contract changes.
The Unite union has announced that administrative workers in Dunton, Stratford, Dagenham, Daventry and Halewood will walk out for 24 hours.
They say Ford has failed to offer its workers a permanent pay increase, and is only offering many of its office workers a one-off payment for 2024.
Unite general secretary Sharon Graham says:
“Despite its huge wealth, Ford has launched a direct attack on its office workers’ pay and terms and conditions. The only reason for this is corporate greed.
“The company’s appalling treatment of our members has simply made them more determined to fight against these cruel and unnecessary changes and for a fair pay rise. They have Unite’s total and unflinching support as they strike for a better deal.”
🚨Ford nationwide strike starts tomorrow
— Sharon Graham (@UniteSharon) October 29, 2024
💬Despite its huge wealth, @forduk has launched a direct attack on its office workers’ pay and terms and conditions. This is corporate greed!
Members have @unitetheunion's total support as they strike for a better deal. #strike #ford pic.twitter.com/ltQFrhpT5h
Former chancellor Jeremy Hunt is still trying to prevent a report into the £22bn “black hole” left for the Labour government being released tomorrow.
Hunt has written to the cabinet secretary, arguing it would be wrong for the Office for Budget Responsibility to release its review into whether it was misled by the previous government on budget day.
He claims the OBR is straying into political territory with the timing of its review into the “adequacy of the information and assurances” on departmental spending the Treasury provided for the March budget (when he was chancellor).
Hunt is also unhappy that the OBR appears to have shown the review to the new government, while not consulting him during its inquiry.
Hunt is asking Simon Case to assess whether it is acceptable for the OBR to publish the review on budget day.
He says:
The OBR must be politically impartial and the public and markets need to know that it is holding the government to account without fear or favour.
I have written to the Cabinet Secretary to ask why basic rules of fairness are not being followed. If we are to keep the OBR out of the political fray he needs to act before it is too late.
The OBR must be politically impartial and the public and markets need to know that it is holding the government to account without fear or favour.
— Jeremy Hunt (@Jeremy_Hunt) October 29, 2024
I have written to the Cabinet Secretary to ask why basic rules of fairness are not being followed. If we are to keep the OBR out of… pic.twitter.com/iUsDEQTduA
Hunt has already complained to the OBR, last week, and was rebuffed on Sunday:
Updated
Ireland's GDP grew 2% in last quarter
Just in: Ireland’s economy returned to growth in the last quarter, mainly due to the multinational companies based in the Republic.
Irish GDP rose by 2% in July-September, new data from the Central Statistics Office shows.
This was “driven mainly by an increase in the multinational dominated sectors”, the CSO reports.
Enda Behan, CSO statistician, explains:
This moderate growth was driven by an increase in the multinational dominated sectors of Industry and Information & Communication in Q3 2024. GDP is estimated to have fallen by 1.2% when compared with Q3 2023.
Results for year-to-date 2024 (January-September 2024) compared with the equivalent period of 2023 show GDP declining by 3.3%.
Back in the financial markets, the interest rates on UK benchmark government debt is very slightly higher today.
The yield (or rate of return) on 10-year UK gilts has nudged up to 4.273%, up from last night’s close of 4.257% (so a small increase, of under two basis points).
Yesterday, it touched 4.284%, the highest since just before the general election at the start of July.
10-year gilt yields are still below the levels hit in the aftermath of the 2022 mini-budget chaos, and also lower than the peaks seen in 2023.
The increase in mortgage approvals last month shows that the housing market is “reviving” and will continue to improve over the next year, says Thomas Pugh, economist at audit, tax and consulting firm RSM UK.
Pugh says:
All the factors which are contributing to the broader economic recovery are also positive for the housing market. Lower inflation, higher household incomes, lower interest rates and, until recently at least, recovering consumer confidence will all help to drive housing transactions and prices higher.
The effective interest rate on newly drawn mortgages decreased by 8 basis points, to 4.76% in September. And with house prices still about 2% below the record highs seen in the summer of 2022, there is plenty of room for growth to catch up. We’re expecting annual price rises of between 4% and 5% by the end of the year.
UK mortgage approvals hit highest since before 2022 mini-budget
Newsflash: mortgage approvals in the UK have hit their highest level in over two years.
New Bank of England data shows that 65,647 mortgages for house purchases were approved in September, an increase of 689 compared with August.
That’s the highest level since August 2022 – the month before the mini-budget drove up borrowing costs and dampened demand for mortgages.
Approvals for remortgaging increased by 3,100 to 30,800.
Stephanie Daley, director of partnerships at mortgage advisor Alexander Hall, says momentum is buildling in the market:
“Despite the air of uncertainty caused by the looming Autumn Statement, the UK property market has continued to benefit from a robust level of mortgage market activity, recording a fourth consecutive month of positive growth where approvals are concerned.
This momentum is only likely to build further once the dust has settled on tomorrow’s Budget, as both buyers and lenders will have a clearer view of where they stand within the market.
Simon Gammon, managing partner at Knight Frank Finance, reckons budget nerves are holding the market back:
“The relatively small uptick in mortgage approvals during September is consistent with consumer confidence surveys showing how nervous people are about this week’s Budget.
I can’t remember a fiscal event with so much speculation in the build-up. All sorts of policies and potential tax rises have been floated in recent months, so it’s unsurprising that people feel hesitant about purchasing a new home.
The BoE also reports that the ‘effective’ interest rate – the actual interest paid – on newly drawn mortgages decreased by 8 basis points, to 4.76% in September.
That follows its cut to interest rates in August, down from 5.25% to 5%.
Updated
Moneyfacts: Average mortgage rates unchanged today
UK mortgage rates are unchanged again today, despite concerns that an increase in government debt could hurt borrowers.
Data provider Moneyfacts reports:
The average 2-year fixed residential mortgage rate today is 5.39%. This is unchanged from Monday
The average 5-year fixed residential mortgage rate today is 5.09%. This is unchanged from Monday
Rates were also unchanged yesterday, and dipped a little last Friday.
Looking ahead, Octane Capital CEO Jonathan Samuels has predicted that reductions in average morgage rates should help property activity to strengthen in the next 12 months.
Samuels reckons that lenders are holding back from aggressively competing on mortgage rates, largely due to budget uncertainty, saying:
“Investors are worried about the impact of this week’s Budget, largely stoked by the government’s talk of a ‘£22 billion black hole’ in public finances that they need to fix.
“With this in mind, mortgage lenders are waiting to see how the government’s announcement alters the market before they start dropping rates to gain market share.
“Obviously we hope Labour keeps tax increases to a minimum, but regardless of what happens the fundamentals of the market are getting stronger all the time.
Criticism over BP profits
Although BP’s profits have fallen, there is still concern that the oil giant is raking in more than $2bn per quarter.
Caroline Simpson, spokesperson for the Warm This Winter campaign, says Rachel Reeves should target energy companies in the budget:
“Another week and another set of obscene profits. This time it’s BP which has pocketed £44.5 billion since the start of the energy crisis.
“That’s why we urge the Chancellor in her budget tomorrow to get tough on profiteers who have made billions milking energy shocks that have left 6.5 million in fuel poverty by clawing back some of that ill gotten gain to fund a social tariff.
“We know 75% of voters would back such a move, particularly financial help for older and disabled people, and they also back getting companies like BP to pay for it.
“It’s also why we would welcome any moves to set the country on the right course with a programme of investment, reversing over a decade of neglect. From ramping up renewable energy to insulating and ventilating the nation’s leaky homes, we can and must upgrade our crumbling infrastructure and bring down everyone’s bills for good.”
[Reminder: Labour has pledged to toughen up the windfall tax on oil and gas profits made in the UK].
Izzie McIntosh, climate campaigner at Global Justice Now, argues that energy companies should be made to pay the full costs of their environmental damage:
“With another quarter comes another galling influx of profits for BP. The fossil fuel industry’s profiteering is only made possible through the destruction of the climate, felt most starkly by countries in the global south.
“As COP29 approaches, leaders of climate-vulnerable countries will be scrutinising the UK’s commitment to reigning in climate-wrecking companies like BP. If this government wants to be taken seriously by the global south and work effectively for a fair end to the climate crisis, it will tax these shameless profiteers to help fund global climate action.”
Tessa Khan, executive director at Uplift – which campaigns for a transition away from oil and gas production in the UK – also points to the costs of climate change:
“These profits are a good reminder that, despite complaints by the oil and gas industry that they are too heavily taxed, companies are in reality awash with cash. It is absolutely right that they pay their fair share while the UK transitions away from expensive oil and gas.
“BPs abandoning of clean energy and climate targets shows that it is operating with no regard for the public interest or the added costs that people in this country are now incurring, both on their energy bills and the impacts of climate change. Why should we have to pay for extra flood defences, or UK farmers be forced to cover the costs of poor harvests, when the companies driving these costs are raking in billions?”
Capital Economics are also confident that Rachel Reeves will avoid a repeat of the market mayhem caused by the mini-budget in September 2022, telling clients:
The possibility of looser fiscal policy than previous planned in the upcoming UK Budget on 30th October suggests the risks to our forecast that the 10-year gilt yield will fall to 3.50% by end-2025 are skewed to the upside, even if a repeat of the upheaval in the gilt market that we saw two years ago is highly unlikely.
HSBC are leading the risers on the FTSE 100 share index this morning, after beating profit forecast and launching another multibillion-dollar stock buyback.
Shares in HSBC are up 3.7% in London, having hit a six-year high in Hong Kong trading earlier today, after the bank reported a 10% rise in pre-tax profits to $8.5bn (£6.6bn) in the three months to the end of September.
More here:
UK shop prices are falling....
UK shop prices are dropping at a faster rate, fuelling hopes of a Bank of England rate cut in November.
The British Retail Consortium has reported that prices were 0.8% lower this month than in October 2023 – compared to an annual fall of 0.6% in September.
Prices of non-food items in October were down 2.1% on a year earlier – unchanged from September – while food prices rose by 1.9%, compared with 2.3% the previous month.
Helen Dickinson, the BRC’s chief executive, said:
“Food inflation eased, particularly for meat, fish and tea as well as chocolate and sweets as retailers treated customers to spooky season deals.
This shop price deflation means prices are lower than a year ago, but the levels of prices are still much higher than before the infationary surge.
But…retailers are also warning that prices could be pushed up again, by geopolitical tensions, the impact of climate change on food supplies, and costs from Government regulation.
Dickinson is urging Rachel Reeves to help the sector:
Retail is already paying more than its fair share of taxes compared to other industries.
The Chancellor using tomorrow’s Budget to introduce a Retail Rates Corrector, a 20% downwards adjustment, to the business rates bills of all retail properties will allow retailers to continue to offer the best possible prices to customers while also opening shops, protecting jobs and unlocking investmen
Rachel Reeves expected to raise national minimum wage by 6%
Tomorrow’s budget is also expected to include a boost for low-paid workers – an increase in the minimum wage of up to 6%.
Rachel Reeves is expected to announce an increase above inflation and even higher than what had been predicted last month.
Younger workers will get an even bigger increase as ministers say that 18 to 20-year-olds should eventually be paid the same as older workers, the Times reported last night.
About 1.6 million people currently receive the “national living wage” of £11.44 an hour, the minimum wage for over-21s. It is expected to rise to more than £12.12 after ministers promised to “raise the floor” on wages.
Here’s the full story:
BP profits fall by a third
Profits at energy giant BP have fallen by a third, after earnings were hit by weaker oil prices.
BP has reported an underlying profit of $2.267bn for the third quarter of this year, down from $3.293bn a year earlier, and also below the $2.756bn it made in April-June.
This appears to be BP’s smallest quarterly profits since the fourth quarter of 2020, when earnings collapsed in the height of the pandemic.
But, it does beat City forecasts; analysts had expected just $2bn in underlying profit for the quarter.
BP blames the fall on weaker profit margins at its refining business, and weaker oil trading.
Chief executive officer Murray Auchincloss, who has been criticised for reversing some of BP’s green energy plans, says:
We have made significant progress since we laid out our six priorities earlier this year to make bp simpler, more focused and higher value. In oil and gas, we see the potential to grow through the decade with a focus on value over volume.
We also have a deep belief in the opportunity afforded by the energy transition - we have established a number of leading positions and will continue high-grading our investments to ensure they compete with the rest of our business. I am absolutely clear that the actions we are taking will grow the value of bp.
Despite the falling profits, BP is continuing to funnel cash to investors. It has announced it will buy back another $1.75bn shares in the next quarter, maintaining the pace of its buyback programme.
Updated
Introduction: Bond managers relaxed about budget risks
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
With a day to go until the budget, big investors seem relaxed about the prospect of chancellor Rachel Reeves’s first fiscal event – even though it may include billions of pounds of higher borrowing.
Although fears of bond vigilantes looms over the Treasury, after the mini-budget debacle two years ago, the mood in the City appears sanguine ahead of tomorrow’s statement.
The government has rolled the pitch ahead of the budget, with Reeves confirming last week that she’ll introduce new fiscal rules that could unlock £50bn of new investment – while also promising guardrails to ensure project offer value for money.
And that effort seems to have helped reassure the investors whose confidence the UK needs to maintain.
Peder Beck-Friis, economist at bond trading giant Pimco, says his firm still finds gilts (UK government debt) “attractive”, telling clients that Reeves is unlikely to spend any additional borrowing headrorom recklessly.
As Beck-Friis puts it:
“We expect the budget to maintain a tight fiscal path ahead, with the deficit continuing to decline.
While the new debt target may allow for more spending in the future – possibly in a second term – the government is likely to proceed cautiously, loosening policy only after establishing credibility or if market conditions change.”
Beck-Friis adds that the budget is “unlikely to undermine fiscal credibility”.
UK bond yields (the rate of return on government debt) has been rising since mid-September, with the 10-year bond yield hitting a near-four-month of 4.284% yesterday.
But, the gap betwen UK and US government borrowing has also been narrowing in recent weeks. At the start of the month, London was being charged more than Washington to borrow for a decade, but now yields are basically in line again.
Reuters has polled 10 bond managers, and found that most are “sanguine” about the risks of holding UK debt.
For example, Matthew Amis of investment group Abrdn says he is “Overweight UK gilts” versus other developed market government bonds, explaining:
“Inflation is well below the Bank of England’s forecasts. Despite the negative headlines around the UK budget, we think its bark could be worse than its bite.”
Cedric Scholtes, head of global sovereigns, inflation and rates at BNP Paribas Asset Management say that the UK is one of “our preferred markets.”
“While we anticipate the Chancellor to take advantage of the increased fiscal headroom from a recalibration of policy rules, we think HM Treasury will be mindful that increased borrowing not be excessive and (that it is) focused on financing investment.”
The agenda
9.30am BST: Bank of England money and credit data for September
11.30am BST: House of Commons Treasury questions with Rachel Reeves and ministerial team
1pm BST: US house prices index from Case-Shiller
2pm BST: JOLTS survey of US job openings
Updated
