New outbreak of fever on European rates

Les marchés parient désormais sur une hausse de 150 points de base en novembre pour le taux directeur de la Banque d'Angleterre.

Posted Sep 27, 2022, 6:30 PMUpdated on Sep 27, 2022 at 7:43 PM

A wave of panic blew through European government bonds on Tuesday. And he came again from London. The yield on English 10-year securities took 25 basis points (bps), to reach 4.52%, a 14-year high. And that of the Gilts at 30 years approached 5%, its level of 2004. British bonds involved in their rout all the debts of the European States. The day after Bercy announced a record financing plan of 270 billion euros for 2023, the French 10-year rose by nearly 15 bp, to 2.86%. Unheard of since March 2012.

The markets are not recovering from the shock wave of the plan presented by the British Minister of Finance, Kwasi Kwarteng, which provides for massive tax cuts and increased recourse to debt. The decision worried even Atlanta Fed President Raphael Bostic, who said it would add to economic uncertainty and increase the risk of recession. “The situation is not tenable,” said Franck Dixmier, global head of bond management at Allianz GI. On the one hand, the British government is taking measures that are likely to drive up prices, and on the other, the Bank of England is trying to curb inflation. This means that the central bank will have to strike even harder. »

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