UK economy requires intervention if GILTs are at 5%!!!

October 6, 2022 in News by RBN Staff




Source: Reddit


Bank of England has explained what happened last 27th Sep, when it was forced to intervene the gilt market (indirectly bailing out all the pension funds…)

So that quick, ah? Current 30 YR Gilt is yielding at 4.3%, if it goes back again to 5%, byebye UK Economy and welcome again to the Great Financial Crisis 2.0

What are your bets then? UK has no alternative now. If inflation keeps rising, which will as per the latest sentiment released this morning, the BoE can’t rise interest rates agressively bcuz it will break down the whole UK economy…but if the BoE does nothing… it will break down equally the whole economy.

30YR Chart


COMMENT ON SOURCE POST (click to view more):

TakAnnix  30 points 

I’m not sure it’s that clear cut. From what I understood the reason that the pension funds needed the help was due to margin calls because the rates shot up so quickly. I’d assume pension funds would be able to deleverage if they have more time. So slowly rising rates past 5% would be ok.