The 10-year gilt yield hit 5.52%, its highest since 2007, while the services surveys held steady. With about half of the £24bn fiscal buffer likely gone, the 28 October Budget matters more than the next Bank of England rate vote.
Mohamed El-Erian flags the 30-year gilt at a 6% handle, its highest in 28 years, as markets price the fiscal bind ahead of the 28 October Budget. Source
This week's UK surveys were about as good as a slowing economy gets. The 10-year gilt yield rose to 5.52% on Thursday anyway, the highest since July 2007, while the 20-year and 30-year touched their highest since 1998 before easing. The Budget lands on 28 October, and the bond market is pricing the Treasury's arithmetic, not the activity data.
