Last week was highlighted (or lowlighted depending on your view) by U.K. Prime Minister Liz Truss and Chancellor of the Exchequer Kwasi Kwateng’s ridiculous “mini-budget” that proposed a huge, unfunded tax cut for the wealthiest citizens to allow the economy to grow itself out of a currency in free-fall, soaring interest rates and crippling inflation. The plan is titled “Get Britain Moving Again!” The plan certainly got things moving again, moving rapidly in the wrong direction. The UK Gilt (Treasury bonds) market reacted to the plan to kill inflation with inflation by crashing along with Pound Sterling. Unfortunately, as long dated Gilts dropped as much as 30% in the two trading days after the plan’s big rollout the world discovered what Liability Driven Investments (LDIs) were.
Are We at the “Oh SH*T” Moment Yet?
Are We at the “Oh SH*T” Moment Yet?
Are We at the “Oh SH*T” Moment Yet?
Last week was highlighted (or lowlighted depending on your view) by U.K. Prime Minister Liz Truss and Chancellor of the Exchequer Kwasi Kwateng’s ridiculous “mini-budget” that proposed a huge, unfunded tax cut for the wealthiest citizens to allow the economy to grow itself out of a currency in free-fall, soaring interest rates and crippling inflation. The plan is titled “Get Britain Moving Again!” The plan certainly got things moving again, moving rapidly in the wrong direction. The UK Gilt (Treasury bonds) market reacted to the plan to kill inflation with inflation by crashing along with Pound Sterling. Unfortunately, as long dated Gilts dropped as much as 30% in the two trading days after the plan’s big rollout the world discovered what Liability Driven Investments (LDIs) were.