The Bank of England was forced to intervene in the markets, following the release of the ludicrous unfunded stimulus mini-budget from the new British PM and Chancellor, which crashed the UK Pound and blew up the UK Bond Market. The crazies running Britain thought it would be a good idea to fix the economic crises, by employing the very same tactics, that caused it? The massive expansion of spending through tax cuts and energy subsidies were completely unfunded and triggered an explosion in UK Gilts and the GBP collapsed to record lows (1.0370). The Bank of England has been forced to intervene, by reversing the sale of bonds (QT) and adding QE through the purchase of long-dated Gilts. They will also need to raise interest rates again, which is all highly inflationary, the main problem they are tasked with solving. UK gilts responded and yields retreated, while the GBP rallied back to 1.0900, but this is only temporary and may trigger ‘Hyper-Inflation’.
The impact of the Bank of England intervention spread across the Atlantic and US Bond Yields also eased, as did the US Dollar. The EUR jumped to trade above 0.9970, despite a collapse in German Consumer Confidence, while the Yen held below 145.00. The BOE news overshadowed the other big news of the day, the sabotage of Nord-Stream 1 & 2 Baltic gas lines, cutting off gas supplies to Germany. This is a calamity for German business and the German people, coming into winter and will mean extreme pain will be spread uniformly across the whole country. This is effectively de-industrialising the engine room of Europe and will further deepen the energy crises and the recession.
The bounce in markets was widespread and included commodities and equities. The plunging reserve allowed the AUD to regain 0.6500, while the NZD looked to regain 0.5700. One thing is for certain, market volatility will continue.