Gilts fall amid U.K. policy confusion; U.S. stocks rise
BNN Bloomberg
Gilts fell and the pound whipsawed as traders struggled to make sense of U.K. policy. U.S. futures and European stocks rose ahead of Thursday’s inflation report.
The Bank of England confirmed its plan to end emergency bond purchases on Friday after confusion sparked by a Financial Times report that the central bank was prepared to extend support to stave off a crisis in U.K. pensions. Meanwhile, some investors are betting that the government may make further fiscal u-turns.
A report that the UK economy shrank unexpectedly in August also weighed on the nation’s bonds. The yield on 30-year gilts -- favored by investors such as pension funds at the heart of recent market stress -- rose to 4.95 per cent.
“The Bank of England is a test case for how hawkish central banks can be without doing damage to financial stability,” said Michael Metcalfe, global head of macro strategy at State Street Global Markets.
