Saturday, November 26

Pound slides; former BOE chief Carney accuses government of ‘undercutting’ Bank – business live | Bonds


Estate agents tell of the woes in Britain’s housing market, where a record number of mortgage products were withdrawn and property sales have fallen through, in the wake of Kwarteng’s mini-budget last Friday.

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Almost 1,000 mortgage products were pulled overnight from the market, according to Moneyfacts yesterday.

“,”elementId”:”64c7091c-faa6-4a51-a1a7-0256c535c306″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

Ian Wyn Jones, of the eponymous estate agents in Gwyneth in north Wales, told BBC radio 4’s Today programme:

“,”elementId”:”9efb3cfe-d00f-4631-aff6-f7cee2556dfe”},{“_type”:”model.dotcomrendering.pageElements.BlockquoteBlockElement”,”html”:”

n

What I’ve seen in the last 24 hours, a lot of my clients’ mortgage offers have been pulled, properties have collapsed in terms of the sales, chains have collapsed, it’s wiped a lot of cash from the pipeline. It doesn’t look good at the moment.

n

We had about four properties yesterday where lenders just pulled their offers.

n

“,”elementId”:”0f568b85-5926-4209-a2eb-42e96bc6ecd0″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

The sudden shift is threatening to stall the housing market, with borrowers saying they have been unable to secure loans or have had provisional offers withdrawn, while others are paying huge financial penalties to break their existing deals and in order to lock in fixed rates for longer, report the Guardian’s Lisa Carroll and Clea Skopeliti.

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Good morning, and welcome to our rolling coverage of business, the world economy and the financial markets.

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Criticism of Kwasi Kwarteng’s mini-budget last Friday – a package of £45bn of unfunded tax cuts that mainly benefit the wealthy – continues to mount.

“,”elementId”:”d44881e1-9776-4a9a-b21d-e44af3ae1f0a”},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

Sir Mark Carney, who preceded Andrew Bailey as Bank of England governor, has accused the UK government of “undercutting” the UK’s economic institutions. He told the BBC:

“,”elementId”:”89f6ac8f-20d6-430d-a523-e1a748256766″},{“_type”:”model.dotcomrendering.pageElements.BlockquoteBlockElement”,”html”:”

n

Unfortunately having a partial budget, in these circumstances – tough global economy, tough financial market position, working at cross-purposes with the Bank – has led to quite dramatic moves in financial markets.

n

There was an undercutting of some of the institutions that underpin the overall approach – not having an OBR forecast. [from the fiscal watchdog, the Office for Budget Responsibility]

n

The message of financial markets is that there is a limit to unfunded spending and unfunded tax cuts in this environment and the price of those is much higher borrowing costs for the government and mortgage holders and borrowers up and down the country.

n

“,”elementId”:”2dd6a835-b116-4646-a147-deeff1782a53″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

The pound continues to slide, despite the Bank of England’s emergency intervention to stabilise the bond market. This has calmed nerves in the bond and stock markets, while sterling remains under pressure.

“,”elementId”:”78c9ec41-3550-4cf7-a864-fbe74c9caad4″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

Asian stock markets mostly rose, with Japan’s Nikkei up 0.95% while Hong Kong’s Hang Seng is down 0.35%.

“,”elementId”:”c0b9f90a-426d-49a8-aa23-f47f2a9ac5aa”},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

Sterling is trading 1.1% lower at $1.0766 this morning. The euro has also weakened against the dollar, by 0.75% to $0.9663. The dollar, boosted by its safe-haven appeal and the Fed’s interest rate hikes, has strengthened generally, but sterling has been the worst-hit major currency in recent days.

“,”elementId”:”8c4d7490-c218-4b02-af86-16515694b01a”},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

The Bank of England was forced to step in to head off a funding crisis for Britain’s pension funds, after Kwarteng’s ill-received mini budget led to a bond selloff, sending government borrowing costs soaring. The central bank has set aside £65bn to buy longer-dated bonds over the next 13 working days to ease pressure on pension funds and insurers.

“,”elementId”:”196489c9-58cb-4c55-92f5-01c9bb983341″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

ANZ economist Finn Robinson says:

“,”elementId”:”8d0dfdd9-81d2-4be0-9c89-3fbbb4de642a”},{“_type”:”model.dotcomrendering.pageElements.BlockquoteBlockElement”,”html”:”

n

It’s all a bit of a mess.

n

How long the calm and fresh optimism lasts remains to be seen. For one, this re-stimulation will lift, not quell UK inflation, and that’s bad for bonds and sterling.

n

“,”elementId”:”81471b8e-08c9-4228-8954-66752416c650″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

Yields on gilts, as UK government bonds are known, especially 30-year bonds, fell sharply after the Bank’s move. The 10-year benchmark bond fell back to 4%. US Treasuries also rebounded, where benchmark 10-year yields fell from over 4% to 3.7472%. (Yields move in an inverse relationship to prices.)

“,”elementId”:”150d91ab-a8ae-430b-87c7-ae47eedb0a62″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

Carney said on radio 4’s Today programme:

“,”elementId”:”4e655df9-d2a5-40c6-8da7-a507b5b20771″},{“_type”:”model.dotcomrendering.pageElements.BlockquoteBlockElement”,”html”:”

n

If the Bank had done nothing, we would have had further moves up in government bond yields and potentially some of these pension funds unable to meet short-term obligations and knock-on effects that were beginning to show up.

n

And that would more than ripple, it would cascade through financial markets to the counterparties the people that those pension funds deal with.

n

The core thing is the Bank acted, it was able to act because it has that structure and it rightly stepped in at the point where the system was about not to function.

n

“,”elementId”:”190c34ea-9029-4931-ab36-cd01eb46448a”},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

Also Read  El último combate armado entre España y Marruecos por un islote que casi acaba en desastre militar

Porsche makes its stock market debut today, in what is expected to be the second-largest initial public offering in German history.

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It priced its shares at the top end of the announced range, at €82.50 a share. They are trading 2.9% higher before the official start of trading on the Frankfurt stock exchange later this morning.

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Porsche is being spun out of Volkswagen, and in a nod to its most famous model, Porsche has been split into 911m shares. Volkswagen is owned by Porsche Automobil Holding, the investment vehicle of the founding Porsche and Piech family.

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The Agenda

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    n

  • 8am BST: Spain inflation for September (forecast: 10.1%)

  • n

  • 10am BST: Eurozone consumer confidence final for September

  • n

  • 1pm BST: Germany inflation for September (forecast: 9.4%)

  • n

  • 1.30pm BST: US GDP final for second quarter

  • n

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Key events

Estate agents tell of the woes in Britain’s housing market, where a record number of mortgage products were withdrawn and property sales have fallen through, in the wake of Kwarteng’s mini-budget last Friday.

“,”elementId”:”abacfcae-6dbe-45b4-82aa-09c70df9bf15″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

Almost 1,000 mortgage products were pulled overnight from the market, according to Moneyfacts yesterday.

“,”elementId”:”64c7091c-faa6-4a51-a1a7-0256c535c306″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

Ian Wyn Jones, of the eponymous estate agents in Gwyneth in north Wales, told BBC radio 4’s Today programme:

“,”elementId”:”9efb3cfe-d00f-4631-aff6-f7cee2556dfe”},{“_type”:”model.dotcomrendering.pageElements.BlockquoteBlockElement”,”html”:”

n

What I’ve seen in the last 24 hours, a lot of my clients’ mortgage offers have been pulled, properties have collapsed in terms of the sales, chains have collapsed, it’s wiped a lot of cash from the pipeline. It doesn’t look good at the moment.

n

We had about four properties yesterday where lenders just pulled their offers.

n

“,”elementId”:”0f568b85-5926-4209-a2eb-42e96bc6ecd0″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

The sudden shift is threatening to stall the housing market, with borrowers saying they have been unable to secure loans or have had provisional offers withdrawn, while others are paying huge financial penalties to break their existing deals and in order to lock in fixed rates for longer, report the Guardian’s Lisa Carroll and Clea Skopeliti.

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Good morning, and welcome to our rolling coverage of business, the world economy and the financial markets.

“,”elementId”:”bea3a93b-7ad2-4bba-971f-9cf862018759″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

Criticism of Kwasi Kwarteng’s mini-budget last Friday – a package of £45bn of unfunded tax cuts that mainly benefit the wealthy – continues to mount.

“,”elementId”:”d44881e1-9776-4a9a-b21d-e44af3ae1f0a”},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

Sir Mark Carney, who preceded Andrew Bailey as Bank of England governor, has accused the UK government of “undercutting” the UK’s economic institutions. He told the BBC:

“,”elementId”:”89f6ac8f-20d6-430d-a523-e1a748256766″},{“_type”:”model.dotcomrendering.pageElements.BlockquoteBlockElement”,”html”:”

n

Unfortunately having a partial budget, in these circumstances – tough global economy, tough financial market position, working at cross-purposes with the Bank – has led to quite dramatic moves in financial markets.

n

There was an undercutting of some of the institutions that underpin the overall approach – not having an OBR forecast. [from the fiscal watchdog, the Office for Budget Responsibility]

n

The message of financial markets is that there is a limit to unfunded spending and unfunded tax cuts in this environment and the price of those is much higher borrowing costs for the government and mortgage holders and borrowers up and down the country.

n

“,”elementId”:”2dd6a835-b116-4646-a147-deeff1782a53″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

The pound continues to slide, despite the Bank of England’s emergency intervention to stabilise the bond market. This has calmed nerves in the bond and stock markets, while sterling remains under pressure.

“,”elementId”:”78c9ec41-3550-4cf7-a864-fbe74c9caad4″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

Asian stock markets mostly rose, with Japan’s Nikkei up 0.95% while Hong Kong’s Hang Seng is down 0.35%.

“,”elementId”:”c0b9f90a-426d-49a8-aa23-f47f2a9ac5aa”},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

Sterling is trading 1.1% lower at $1.0766 this morning. The euro has also weakened against the dollar, by 0.75% to $0.9663. The dollar, boosted by its safe-haven appeal and the Fed’s interest rate hikes, has strengthened generally, but sterling has been the worst-hit major currency in recent days.

“,”elementId”:”8c4d7490-c218-4b02-af86-16515694b01a”},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

The Bank of England was forced to step in to head off a funding crisis for Britain’s pension funds, after Kwarteng’s ill-received mini budget led to a bond selloff, sending government borrowing costs soaring. The central bank has set aside £65bn to buy longer-dated bonds over the next 13 working days to ease pressure on pension funds and insurers.

“,”elementId”:”196489c9-58cb-4c55-92f5-01c9bb983341″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

ANZ economist Finn Robinson says:

“,”elementId”:”8d0dfdd9-81d2-4be0-9c89-3fbbb4de642a”},{“_type”:”model.dotcomrendering.pageElements.BlockquoteBlockElement”,”html”:”

n

It’s all a bit of a mess.

n

How long the calm and fresh optimism lasts remains to be seen. For one, this re-stimulation will lift, not quell UK inflation, and that’s bad for bonds and sterling.

n

“,”elementId”:”81471b8e-08c9-4228-8954-66752416c650″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

Yields on gilts, as UK government bonds are known, especially 30-year bonds, fell sharply after the Bank’s move. The 10-year benchmark bond fell back to 4%. US Treasuries also rebounded, where benchmark 10-year yields fell from over 4% to 3.7472%. (Yields move in an inverse relationship to prices.)

“,”elementId”:”150d91ab-a8ae-430b-87c7-ae47eedb0a62″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

Carney said on radio 4’s Today programme:

“,”elementId”:”4e655df9-d2a5-40c6-8da7-a507b5b20771″},{“_type”:”model.dotcomrendering.pageElements.BlockquoteBlockElement”,”html”:”

n

If the Bank had done nothing, we would have had further moves up in government bond yields and potentially some of these pension funds unable to meet short-term obligations and knock-on effects that were beginning to show up.

n

And that would more than ripple, it would cascade through financial markets to the counterparties the people that those pension funds deal with.

n

The core thing is the Bank acted, it was able to act because it has that structure and it rightly stepped in at the point where the system was about not to function.

n

“,”elementId”:”190c34ea-9029-4931-ab36-cd01eb46448a”},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

Porsche makes its stock market debut today, in what is expected to be the second-largest initial public offering in German history.

“,”elementId”:”f0dc8d8a-9f5f-4d9a-9753-804c7c3bb07e”},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

It priced its shares at the top end of the announced range, at €82.50 a share. They are trading 2.9% higher before the official start of trading on the Frankfurt stock exchange later this morning.

“,”elementId”:”9da63a1d-1f61-457c-860c-391cd99eefd9″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

Porsche is being spun out of Volkswagen, and in a nod to its most famous model, Porsche has been split into 911m shares. Volkswagen is owned by Porsche Automobil Holding, the investment vehicle of the founding Porsche and Piech family.

“,”elementId”:”dfb27e2a-52ba-4f3b-9b82-31c64470da2f”},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

The Agenda

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    n

  • 8am BST: Spain inflation for September (forecast: 10.1%)

  • n

  • 10am BST: Eurozone consumer confidence final for September

  • n

  • 1pm BST: Germany inflation for September (forecast: 9.4%)

  • n

  • 1.30pm BST: US GDP final for second quarter

  • n

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Filters BETA

Housing and retail stocks are taking a hammering this morning, with Barratt, one of Britain’s biggest housebuilders, the main faller on the FTSE 100, down 8.6%.

The retailers Next and Ocado, and the property firm Rightmove are also among the top losers.

Next warned this morning that the UK could be heading for a second cost of living crisis next year as the slump in the value of the pound drives further price rises, reports our retail correspondent Sarah Butler.

The fashion and homewares retailer cut sales and profit expectations for the year after a disappointing August and on fears that ongoing inflationary pressures would put a squeeze on shoppers’ spare cash.

The FTSE 100 has fallen 87 points, or 1.25%, to 6,918 after the opening bell.

Liz Truss has ended her silence since Friday’s mini-budget, and is speaking publicly in a round of local radio interviews.

The prime minister has defended the package of unfunded tax cuts, saying she is prepared to take “controversial and difficult decisions”.

You can read more on our politics live blog with Andrew Sparrow here.

Estate agents tell of woes in Britain’s housing market

Estate agents tell of the woes in Britain’s housing market, where a record number of mortgage products were withdrawn and property sales have fallen through, in the wake of Kwarteng’s mini-budget last Friday.

Almost 1,000 mortgage products were pulled overnight from the market, according to Moneyfacts yesterday.

Ian Wyn Jones, of the eponymous estate agents in Gwyneth in north Wales, told BBC radio 4’s Today programme:

What I’ve seen in the last 24 hours, a lot of my clients’ mortgage offers have been pulled, properties have collapsed in terms of the sales, chains have collapsed, it’s wiped a lot of cash from the pipeline. It doesn’t look good at the moment.

We had about four properties yesterday where lenders just pulled their offers.

The sudden shift is threatening to stall the housing market, with borrowers saying they have been unable to secure loans or have had provisional offers withdrawn, while others are paying huge financial penalties to break their existing deals and in order to lock in fixed rates for longer, report the Guardian’s Lisa Carroll and Clea Skopeliti.

Introduction: Pound slides; former BOE chief Carney accuses government of ‘undercutting’ Bank

Good morning, and welcome to our rolling coverage of business, the world economy and the financial markets.

Criticism of Kwasi Kwarteng’s mini-budget last Friday – a package of £45bn of unfunded tax cuts that mainly benefit the wealthy – continues to mount.

Sir Mark Carney, who preceded Andrew Bailey as Bank of England governor, has accused the UK government of “undercutting” the UK’s economic institutions. He told the BBC:

Unfortunately having a partial budget, in these circumstances – tough global economy, tough financial market position, working at cross-purposes with the Bank – has led to quite dramatic moves in financial markets.

There was an undercutting of some of the institutions that underpin the overall approach – not having an OBR forecast. [from the fiscal watchdog, the Office for Budget Responsibility]

The message of financial markets is that there is a limit to unfunded spending and unfunded tax cuts in this environment and the price of those is much higher borrowing costs for the government and mortgage holders and borrowers up and down the country.

The pound continues to slide, despite the Bank of England’s emergency intervention to stabilise the bond market. This has calmed nerves in the bond and stock markets, while sterling remains under pressure.

Asian stock markets mostly rose, with Japan’s Nikkei up 0.95% while Hong Kong’s Hang Seng is down 0.35%.

Sterling is trading 1.1% lower at $1.0766 this morning. The euro has also weakened against the dollar, by 0.75% to $0.9663. The dollar, boosted by its safe-haven appeal and the Fed’s interest rate hikes, has strengthened generally, but sterling has been the worst-hit major currency in recent days.

The Bank of England was forced to step in to head off a funding crisis for Britain’s pension funds, after Kwarteng’s ill-received mini budget led to a bond selloff, sending government borrowing costs soaring. The central bank has set aside £65bn to buy longer-dated bonds over the next 13 working days to ease pressure on pension funds and insurers.

ANZ economist Finn Robinson says:

It’s all a bit of a mess.

How long the calm and fresh optimism lasts remains to be seen. For one, this re-stimulation will lift, not quell UK inflation, and that’s bad for bonds and sterling.

Yields on gilts, as UK government bonds are known, especially 30-year bonds, fell sharply after the Bank’s move. The 10-year benchmark bond fell back to 4%. US Treasuries also rebounded, where benchmark 10-year yields fell from over 4% to 3.7472%. (Yields move in an inverse relationship to prices.)

Carney said on radio 4’s Today programme:

If the Bank had done nothing, we would have had further moves up in government bond yields and potentially some of these pension funds unable to meet short-term obligations and knock-on effects that were beginning to show up.

And that would more than ripple, it would cascade through financial markets to the counterparties the people that those pension funds deal with.

The core thing is the Bank acted, it was able to act because it has that structure and it rightly stepped in at the point where the system was about not to function.

Porsche makes its stock market debut today, in what is expected to be the second-largest initial public offering in German history.

It priced its shares at the top end of the announced range, at €82.50 a share. They are trading 2.9% higher before the official start of trading on the Frankfurt stock exchange later this morning.

Porsche is being spun out of Volkswagen, and in a nod to its most famous model, Porsche has been split into 911m shares. Volkswagen is owned by Porsche Automobil Holding, the investment vehicle of the founding Porsche and Piech family.

The Agenda

  • 8am BST: Spain inflation for September (forecast: 10.1%)

  • 10am BST: Eurozone consumer confidence final for September

  • 1pm BST: Germany inflation for September (forecast: 9.4%)

  • 1.30pm BST: US GDP final for second quarter


www.theguardian.com

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