Is the UK the Harbinger of Things to Come

The UK is the lead indicator for the 'bad' side of a new global macro regime where negative supply shocks and political instability drive yields higher. While Gilt yields look potentially attractive on a risk-premium basis, domestic political turbulence remains a headwind.

Key Takeaways

• 1.The UK is currently experiencing a 'bad' rise in yields driven by negative supply shocks and political uncertainty, rather than the 'good' rise associated with growth.
• 2.The 2022 'Truss-Kwarteng' shock serves as an 'inoculation' against future unfunded fiscal blowouts, making a repeat of such a crisis unlikely in the near term.
• 3.Political volatility remains high with potential leadership challenges for PM Starmer and the rising threat of the Reform party, which could impact Gilt yields and immigration policy.

Table of Contents

• Is the UK the harbinger of things to come for global yields?
• Disclaimer

Document Preview

Page 1 of 5

Subscribe for full accessStart Free Trial