Discussion
Martin Sandbu (FT) is the latest analyst to suggest rising bond yields (forcing up the costs of public debt, already causing some difficulties to the new Burnham administration in the UK) is much more about a competition for funds (driven by bond issuance for AI-related data centre investments, for instance) than about the risks of inflation and/or state difficulties in replaying debts, as proposed by bond market analysts.
If so, policy responses might look different?
@GeofCox @ChrisMayLA6 not forgetting that Truss's poor management of expectations triggered a squeeze on the Pension Funds that all had a big uncovered bet on interest rates, forcing the BoE to intervene.
https://www.bscapitalmarkets.com/how-liz-trussrsquo-government-led-to-pension-funds-chaos1.html
Ha ha, yes Truss was an idiot but not quite in the way the press presented it... but this is a lot because economics is so misunderstood in the media, and those that show a little knowledge (however misplaced) are treated as reliable sources...
Install bonfire.cafe
Get the full app experience
@ChrisMayLA6
Bill Mitchell made the same point yesterday - well, the flow of foolish investment into tech plus the certainty of supply-side driven inflation out if Iran - in any case nothing to do with dumbed-down political journalism's misrepresentation of bond yields as a commentary on government borrowing/policy.
On the left we had fun around Liz Truss' bond market crash - but the fact is her mini-budget happened to coincide with the Bank of England's announcement of quantitative tightening. She did walk stupidly into it - did everything wrong, side-stepped the OBR, etc - but the bond market was not commenting on her competence, it was simply reacting to supply-and-demand.