Pound slides; ex-BoE chief Carney accuses government of ‘weakening’ bank bonds

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When asked if there was a crisis, Phelps replied:

There is a crisis in the energy situation and we have addressed that and if any other challenges arise then the government will deal with issues within our purview or, if independent central banks are within theirs, they will be dealt with.

Treasury chief secretary vows ‘strict adherence to spending limits’

Chris Philp, the Treasurer’s No. 2, is on Radio 4’s Today programme.

If we can achieve economic growth, that will be our intention, it will lead to higher wages and lead to the creation of new and better jobs, and ultimately to pay the taxes that fund public services such as health, the NHS, etc.

He then trumpeted a government freeze on energy prices.

Over the past six to nine months, we’ve seen a lot of volatility in global markets, and we’ve seen the dollar strengthen significantly against the euro, yen and pound. We’ve seen interest rates rise around the world, and in fact other countries like the U.S. have seen rates rise more than here.

This isn’t the only country experiencing volatility. A few days ago, the Bank of Japan had to make an extraordinary intervention in the yen-dollar market. But people should be reassured that if intervention is needed to protect their household finances, the government and the independent Bank of England will.

These bond yields have been rising globally for months.

When asked about removing the 45p top tax rate, he defended the move.

That’s one-twentieth, or less than 5% of the total fiscal measure.

The tax measures are designed to make us internationally competitive.

He also pledged to “stick to existing spending targets”.

When asked if the government could bring forward the Nov. 23 fiscal statement, he said no.

The statement is scheduled for the 23rd [November].

Housing and retail stocks were hit hard this morning, with Barratt, one of the UK’s biggest homebuilders and a major loser on the FTSE 100, down 8.6%.

Retailers Next and Ocado and real estate firm Rightmove were also the biggest losers.

Next warned this morning that the UK could face a second cost of living crisis next year as the fall in the pound pushes prices higher, Covering our retail reporter Sarah Butler.

The fashion and homewares retailer cut its sales and profit forecasts for the year after a disappointing August and is concerned that persistent inflationary pressures will squeeze shoppers’ spare cash.

The FTSE 100 was down 87 points, or 1.25%, at 6,918 at the open.

Liz Truss has ended her silence since Friday’s mini-budget, speaking publicly in a round of local radio interviews.

The Prime Minister has defended the unfunded package of tax cuts, saying she is prepared to make “controversial and difficult decisions”.

You can read more about our political live blog with Andrew Sparrow here.

Realtor speaks out about chaos in UK property market

Real estate agents have spoken out about the woes of the UK property market, which saw a record number of withdrawals of mortgage products and a drop in property sales following Kwarteng’s mini-budget last Friday.

According to data from Moneyfacts yesterday, nearly 1,000 mortgage products were pulled from the market overnight.

Ian Wyn Jones, a real estate agent of the same name in Gwyneth, North Wales, told BBC Radio 4’s Today programme:

What I’ve seen in the last 24 hours, a lot of my clients have had their mortgage offers cancelled, properties have collapsed in terms of sales, chains have gone out of business, it’s wiped a lot of cash out of the pipeline. It doesn’t look good at the moment.

We had about four properties yesterday and lenders had just cancelled their offers.

The sudden shift threatens to bring the housing market to a standstill, with borrowers saying they can’t get loans or have withdrawn temporary offers, while others pay hefty fines to break existing deals and lock in fixed rates for longer, Lisa Carroll and Klia Scoperetti for The Guardian.

Brief: Pound slides; ex-BoE chief Carney accuses government of ‘weakening’ banks

Good morning and welcome to our rolling coverage of business, the world economy and financial markets.

Criticisms of Kwasi Kwarteng’s mini-budget – a £45bn unfunded tax cut package benefiting mainly the wealthy – continued to intensify on Friday.

Sir Mark Carney, who was governor of the Bank of England before Andrew Bailey, has accused the UK government of “weakening” the UK’s economic institutions. He told the BBC:

Unfortunately, under these circumstances – a tough global economy, a tough financial market position, a different purpose from the World Bank – there are parts of the budget that have led to quite dramatic changes in financial markets.

Some institutions supporting a holistic approach are weakened – no OBR projections. [from the fiscal watchdog, the Office for Budget Responsibility]

The message from financial markets is that there are limits to unfunded spending and unfunded tax cuts in this environment, and these moves come at a cost of borrowing that is much higher for governments, mortgage holders and borrowers across the country. many.

Sterling continued to slide despite the Bank of England’s emergency intervention to stabilize bond markets. That calmed nervousness in bond and equity markets, while the pound remained under pressure.

Asian stocks were mostly higher, with Japan’s Nikkei up 0.95% and Hong Kong’s Hang Seng down 0.35%.

Sterling was down 1.1% at $1.0766 this morning. The euro was also down 0.75% at $0.9663. The U.S. dollar has generally strengthened, buoyed by safe-haven appeal and a rate hike by the Federal Reserve, but the pound has been the hardest-hit major currency in recent days.

The Bank of England was forced to step in to stem a funding crisis for Britain’s pension funds after poor ratings for Kwarteng’s small budget led to a bond sell-off that sent government borrowing costs soaring. The central bank has set aside 65 billion pounds to buy longer-dated bonds over the next 13 working days to ease pressure on pension funds and insurers.

ANZ economist Finn Robinson said:

It’s a bit messy.

How long this calm and fresh optimism can last remains to be seen. On the one hand, this re-stimulus will boost rather than quell UK inflation, which is bad for bonds and sterling.

Yields on UK government bonds, especially the 30-year bond, have been known to fall sharply following the central bank’s action. The 10-year benchmark bond retreated to 4%. U.S. Treasuries also rebounded, with the benchmark 10-year yield falling from over 4% to 3.7472%. (Yield is inversely proportional to price.)

Carney said on Radio 4’s Today show:

If banks do nothing, government bond yields could rise further, some of these pension funds could fail to meet their short-term obligations, and knock-on effects start to show.

Not only would this have ripple effects, but it would also be passed through financial markets to counterparties dealing with these pension funds.

The core is that the bank acted, and it was able to act because it had this structure and it stepped right in at the point where the system was about to fail.

Porsche made its stock market debut today in what is expected to be the second-largest IPO in German history.

It priced its shares at the high end of the announced range at 82.50 euros per share. They were trading up 2.9% ahead of the official opening of trading on the Frankfurt Stock Exchange later this morning.

Porsche is being spun off from Volkswagen and has been split into 911 million shares in tribute to its most famous model. Volkswagen is owned by Porsche Cars Holding, the investment vehicle of the Porsche and Piech families.

agenda

  • 8am BST: Spanish inflation in September (forecast: 10.1%)

  • 10am BST: Eurozone final consumer confidence index for September

  • 1pm BST: German September inflation (forecast: 9.4%)

  • 1.30pm BST: Final US Q2 GDP

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