abrdn: Commentaar op aftreden Truss

abrdn: Commentaar op aftreden Truss

21 oktober 2022

Politiek Verenigd Koninkrijk
Engelse pond.jpg

Hieronder het commentaar van James Athey, investment director bij abdrn, op het aftreden van Truss.

The news out of the UK continues to come thick and fast. Not content with a near-complete policy u-turn, the Tory party continues to try its level best to make itself unelectable for the foreseeable future.

Meanwhile the Bank of England is going ahead and commencing asset sales as of 1 November and still believes that some caution is warranted with respect to further rate rises. Indeed, they firmly believe that the coming recession will deal with their inflation problem. They are quite possibly right, but I continue to believe it’s a strategy too reliant on hope and one which plays fast and loose with their credibility – a currency hard earned and so easily lost.

What this means for markets feels like a fairground game at the minute. It feels like the rates market is still pricing too many hikes, too little uncertainty and inflation premium and thus we think the curve should steepen. But markets appear to still believe they can coerce the Bank towards a more aggressive rate hiking stance and as such, the front end remain weak and that’s keeping the curve under flattening pressure.

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