Economics
Britain’s $1.8 Trillion Bond Market Ensnared in Brexit Battle
- Gilts pressured by rising inflation bets, tumbling pound
- BOE bond buying provides ‘artficial’ support: Algebris’ Gallo
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The prospect of a messy divorce between the U.K. and the European Union threatens to overwhelm support for nation’s bonds from the Bank of England’s asset purchases.
Gilts have been the worst performers in the developed world this month as a sliding currency pushed investors’ expectations for consumer-price growth to a more than two-year high. Still, with the BOE having committed in August to buying 60 billion pounds ($73 billion) of bonds over six months, that move pales in comparison to the currency’s 18 percent drop since Brexit.