Investors said that while we welcome Hunt’s changes, they have brought the UK back to where it was at the end of September. With the country still in an unstable economic condition and led by a very weak prime minister.
“Hunt has walked the narrow gap between political necessity and economic necessity, and he’s done very well at this point. And obviously we’ve already had a decent reaction (in the market) in public, and the fact that we’re still seeing what we’re seeing is that we’re still seeing a very good job at this point,” said James Athey, chief investment officer. At Abrdn, dropping gold bonds makes sense.
But we don’t think that will get British companies out of the woods completely. We are still talking about an almost inevitable recession accompanied by high inflation. This looks like stagflation, and it’s a very uncomfortable place, so the Bank of England has a lot of work to do.”
UK long-term bond yields, which move inversely with prices, remained low after the statement. The 30-year note yielded 40 basis points, at 4.382%, and the 20-year note lost a similar figure, at 4.48%.
This is one of the biggest daily declines recorded after the sharp drop on September 28, when the Bank of England intervened to stabilize the UK bond market after the mini-budget turmoil.
The pound rose 1.4%, hitting a session high of $1.1332 after the statement. It later gained just under 1% against the dollar and a little less against the euro, somewhat where it was just before the announcement.
London’s FTSE-100 Index is up 0.5% and the FTSE-250 Index of medium-sized companies with a domestic focus has outperformed its European peers, up 1%.