It was hard to go past the UK this morning as we see the government throwing the kitchen sink at their economy to kick start growth, sending the Pound to its lowest level since 1985, whereas the Bank of England hiked interest rates to a 14-year high last week to fight runaway double-digit inflation – it feels like the BOE and Liz Truss’ have started a tough arm wrestle with one likely to lose at least short-term.
- We believe the uptrend in UK Gilts yield has further to play out but some consolidation around the 4% area feels likely.
MM is neutral UK 2-year Gilts around 4% but bullish medium-term
