Here’s your daily snap analysis from Bloomberg UK’s Markets Today blog: UK traders, politicians and journalists will be glued to the reaction of the pound and gilts to today’s budget (with memories of the Liz Truss experience still fresh in the mind), but the nature of markets right now means the signals could be confusing — or even misleading. Fixed income markets, in particular, are in thrall to a host of factors outside of UK fiscal policy, with the outlook for interest rates, the US election, tensions in the Middle East, oil fluctuations and China’s efforts to stimulate its economy all causing big swings. The latter was a big theme yesterday, with hopes of more stimulus in China driving a selloff in bonds that pushed up gilt yields. That move seems to be unwinding today in European bonds, so don’t be too surprised if we see gilts rising before the budget. But even for the rest of the day, things could be messy. Reeves is due to speak fifteen minutes after a closely-watched US jobs report, and the exact time America also reports GDP data and releases its quarterly refunding plan. All could have major implications for global bonds, making it a lot harder to a get a completely clean read on the reaction to the budget. Of course, if the markets loves, or hates, what it hears, that will be obvious. But its worth remembering that where UK yields end today is probably going to be about more than just what Reeves says in Parliament. — David Goodman Check Bloomberg UK’s Markets Today blog for updates all day. |