Jeremy Warner: Printing money seems powerless to halt rise in gilt yields
Friday 08 May 2009
Outlook No wonder the Bank of England is stepping up its programme of "quantitative easing" (QE). Proving the old stock market saying that it is better to travel in anticipation than actually to arrive, gilt yields fell precipitously ahead of the formal announcement of QE, under which the Bank of England is expanding the money supply by buying shed loads of gilt-edged stocks. But they have been rising steadily more or less ever since and after another surge yesterday, the yield on the benchmark 10-year gilt is now higher than before the programme began. The rise has been particularly acute since the Budget, which laid out in glorious Technicolor quite how shockingly large gilt issuance is going to be in future years.
We are not alone. The rout in US bond yields was even worse yesterday. But just think where yields would be without the gilt purchases being undertaken by the Bank. There must be a limit to investors' appetite for government debt, even in a world where there seems to be no appetite for just about any other asset class. Solvency regulation has also been set, sometimes it seems deliberately, so as to force pension funds and other institutional investors into gilts, but even so. Despite the Bank of England's best endeavours, the cost of money is going up, and the biggest loser is going to be the public purse. I fear the punishment of markets is only just beginning.
- 2 Exclusive: Abusers using spyware apps to monitor partners reaches 'epidemic proportions'
- 3 Andy Murray takes to Twitter to show off his Christmas jumper
- 5 Top 10 travel destinations for 2015: From Haiti and Alaska to Namibia and Iceland
PlayStation and Xbox hacked by Lizard Squad
Exclusive: Abusers using spyware apps to monitor partners reaches 'epidemic proportions'
Dublin court rules brain-dead pregnant mother's life support can be switched off
Margaret Thatcher 'expressed fears of Asian rising' at Anglo-Irish summit in 1984
The 'Black Museum': After 150 years, public set to see exhibits from police’s grisly crime museum
British actor Idris Elba cannot star as James Bond because he is black, says shock jock Rush Limbaugh
Rozanne Duncan: Ukip expels councillor for 'jaw-dropping' comments made in BBC TV interview
Germany anti-Islam protests: 17,000 march on Dresden against 'Islamification of the West'
Ukip member gets into Christmas spirit with Union Flag plea to Santa 'for our country back'
BBC director Danny Cohen: Rising UK antisemitism makes me feel more uncomfortable than ever
Katie Hopkins speaks out on childhood obesity: 'Parents of fat children should be prosecuted for child cruelty'
iJobs Money & Business
Not specified: Selby Jennings: VP/SVP Credit Quant Top tier investment bank i...
Not specified: Selby Jennings: Quantitative Research | Global Equity | New Yor...
Not specified: Selby Jennings: SVP Model Validation This top tiered investment...
Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...