vand wrote:Well, bonds yields across all durations have broken out to new highs recently, meaning the holder of the bonds have seen their investments fall to new lows.
and yet the case for owning bonds seems as weak as it has ever been with real rates as negative as we have seen in the last year.
I don't see an emergency energy bill rescue package from the Government as helping. The inflation that would have happened in energy will instead just move to something else - probably to higher borrowing costs as the price of digging an ever larger hole in the public finances "subsidize" energy costs.
£17Bn tax reduction benefit for firms as well, including energy firms. She's betting big on inward investment, but instead is more inclined to see a collapse in GDP, ingrained and high inflation, outflows (weaker Pound) all compounding a downward spiral, potentially to where another 1970's style IMF bailout is required due to the risk of the UK being unable to cover its debt interest payments. Seemingly the best the Tories have to offer is a imbecile - that is doomed to further deepen the pain. I suspect as part of the bailout that the IMF may insist that the UK stops borrowing in order to cover paying the excessive prices/profits that energy firms make in return for selling gas extracted out of the UK and delivered to UK customers. That Truss could and should have done from the offset but opted not to.
A article the other day indicated that a Scottish baker had seen their gas bill rise from £9K/year to £79K/year. Should they increase prices from £1/loaf to £9/loaf in reflection - or simply shut up shop. A situation that will be very broadly replicated across very many SME's across the UK. Will you go to the pub when its £25/pint, or for a steak meal when its £100/steak. Maybe, but only if your wages/income had risen at least three of four fold.
Bonds paying a few percent unless also inflation linked - might as well as just leave it in hard cash for what that's worth in real terms. Lend to the UK (buy Gilts) when the Pound is likely to decline a further 15% on top of the 15% its already dropped - nah! Inward investment that might strengthen the Pound would need to see massively more higher returns than the high rates of inflation and declining currency amounts. But maybe once a collapse has followed through, IMF bailout, a potential 'disaster recovery' play - and only then might the Pound turn around and inflation start to flatten off.
