Coming into land at Heathrow… after an eventful week at the IMF, off the plane that Kwarteng was meant to be on … not much can have happened in 7 hours, surely? ✈️ #A380 
a lot going on in the world economy that we didn’t get a chance to cover because of the UK focus…
Mentioned on Ten last night, Will write up, but TL DR…
- concerns that in rising rates era, more corners of lightly regulated non bank sector bound to pop as LDI pensions did…
Mentioned on Ten last night, Will write up, but TL DR…
- concerns that in rising rates era, more corners of lightly regulated non bank sector bound to pop as LDI pensions did…
-abundantly clear at highest portals of foreign financial power, in Governments & banks etc, that question marks over UK market credibility matter, eg told UK gilt crisis shifted Federal Funds futures rate.
saying there have been no UK specific factors is credibility destroying
saying there have been no UK specific factors is credibility destroying
demonstrably untrue “no uk factors” claim is one thing hitting credibility, as it signals a clear lack of willingness to deal with a problem, because it is fundamentally a denial of one… but as bad, poss worse was what I heard about something else …
Market players can discount tall political claims, sure, but when pol figures say things that sound as if they have no clue what theyre talking about - that’s a major issue.
Big ex - idea mortgage rates are only linked to Bank of England base rates, when 2/5 yr gilts v important
Big ex - idea mortgage rates are only linked to Bank of England base rates, when 2/5 yr gilts v important
Clear to me that in past 3 weeks senior UK officials who do understand these things have had to explain some market basics to some Cabinet ministers in an effort to stop them saying things that weaken market credibility/ seem to deny problems in a way received as a market signal
And we have been in a moment where random comments from even non senior British Cabinet ministers get flashed on Reuters/ Bloomberg terminals, and traded upon in debt markets, in a somewhat unstable way, not at all normal for an advanced G7 economy…
So that is new Chancellor’s challenge (forgive me haven’t heard his interviews yet ✈️ )
-clean up the mess, win back most of the lost credibility, come up with politically viable plan that adds up, BUT against backdrop of further risks from eg non banks in global finance system
-clean up the mess, win back most of the lost credibility, come up with politically viable plan that adds up, BUT against backdrop of further risks from eg non banks in global finance system
I’ll write up reflections from a week talking to some of these players at the IMF meeting, after I’ve had a chance to hear Chancellor Hunt’s interviews.
Also need to relay story of Thursday at the IMF with Chancellor Kwarteng, extraction from embassy in blacked out cars etc
Also need to relay story of Thursday at the IMF with Chancellor Kwarteng, extraction from embassy in blacked out cars etc
One last thing - having watched this play out in other countries, what could predictably happen is that the finance minister tells colleagues to shut up, and becomes the single point of market contact, delivers on what they say, calms the situation, and then becomes v powerful.
How politically sustainable is that though?
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