In the news

The global signals from the UK’s mini-budget matter. Modern monetary theory has been taken into a corner by the bond markets and beaten up. Advanced economy bond yields are not supposed to soar the way UK gilt yields rose.

This also reminds investors that modern politics produces parties that are more extreme than either the voter or the investor consensus. Investors seem inclined to regard the UK Conservative Party as a doomsday cult.

Tax cuts are unlikely to give the UK a meaningful medium-term boost (the supply constraints in the UK economy are more about health and education). A short-term “sugar high” is likely but may be limited. A high-income earner’s rational response would be to increase savings in anticipation of future tax increases.

Woke UBS economists
https://www.ubs.com/global/en/wealth-management/insights/chief-investment-office/market-insights/paul-donovan/2022/mmt-takes-a-pounding.html/global/en/wealth-management/insights/chief-investment-office/market-insights/paul-donovan/2022/mmt-takes-a-pounding.html

Estimated number of mortgages reaching end of fixed rate period by initial fixed rate

• lots of caveats but suggests around 300,000 per quarter at the moment, peaking at around 375,000 in Q2 next year
  

This is nightmare for most of middle class - someone with a £250k mortgage currently paying 3% would see their interest rate rise to 6.5% or simple terms annual interest bill rise from £7,500 to £16,250 They would need to find over £700 extra per month to not lose their house

https://twitter.com/Guy_Stallard/status/1574321288025616384

Pie on the case:

https://youtu.be/w-V5FVludFk

Truss and kwasi are outperforming already. Cool "gamble" guys.

Boris Johnson is going to be the next Prime Minister.

depends what happens with the Commons Partygate inquiry though right?

If the economy tanks further Boris would be voted back in by the Tory faithful even if he did his campaign while dancing on Betty’s grave.

Not if he's no longer an MP, I assume he wouldn't get re-elected as part of a big Boris out campaign.

2 weeks in and the idiots have already broken the economy.

12 years in.

Their track record is pretty good on trashing the economy, trade, relationships with other countries, health system, transport, etc.

The last 2 weeks is just a continuance of the regard they've been showing to country over the last 12 years.

Woke UBS economists

Idk why they're always talking us down. If only they believed harder we'd all be fine.

Absolutely not a supporter of Johnson in any way shape or form, and I totally recognise that he basically says anything to everyone.

But his overall vision was so different from this lot. Whether you believed the chat or not, his pitch both in Brexit and at the GE was spend, growth, and distribution.

He had a vision? Beyond saying whatever necessary to ensure he remained in power?

The thing is, this isn't fiscal conservatism is it? Well it is, but its decades out of date probably ineffective fiscal conservatism. AFAIK, no other conservative government in Europe has needed or would want to take this approach.

Handcuffed by the EU aren't they lol

Is it a bad thing that this is a nightmare for most of the middle class?

It's not just the middle class though is it, it's anyone who has a mortgage or rents from someone with a mortgage, they will all suffer, I don't know why he singled out the middle class

Nah.

History shows that when the middle classes get hit by catastrophic events wiping out their savings nothing bad comes of it.

I know, I know. But the overall tennor of the message, what he was selling, was very much not "moar bankers bonuses and borrowing to prevent energy companies getting slightly less massive profits".

We are at the "Boris wasn't all bad" stage already. Oh no.

Genuinely starting to get a bit nervous about the future.

The news cycle is continuously reading like a GCSE essay on considering the factors that lead to WWIII.

The rise of populist Far Right parties in particular

I would like to think a nuclear meltdown which destroys London would be worse than 2 more weeks of Truss et al in charge. But. Well.

I suppose this is the closest that a central bank gets to throwing shade. Looks like no emergency hike?

I welcome the Government’s commitment to ... the role of the Office for Budget Responsibility in its assessment of prospects for the economy and public finances.

https://www.bankofengland.co.uk/news/2022/september/statement-from-the-governor-of-the-boe?sf170856569=1

FX market is puking on cock again as a result

This will help calm things and only 8 weeks to go by which point we’ll need wheelbarrows of GBP for our weekly shops.

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