Tuesday, Jan 05, 2010
A little more pressure on interest rates
Telegraph: Pimco move to sell gilts raises spectre of a UK sovereign debt crisis
Fears that Britain may be heading for its first sovereign debt crisis since the 1970s hit a new intensity after Pimco, the world's biggest bond house, declared that it is starting to sell off its holdings of gilts. The American investment group said it will be a net seller of UK Government bonds this year, at the very point when the Bank of England brings its £200bn programme of purchases to and end and the Treasury attempts to raise unprecedented sums through the capital markets.
Posted by quiet guy @ 01:05 PM (985 views) Add Comment
7 Comments
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1. mrflibble said...
The UK is fast running out of options and the markets are getting impatient with us. So what's it to be, a credible plan or more freshly printed fifty pound notes?
2. matt_the_hat said...
This is happening a little to fast for my exit stratergy
3. paul said...
Mervyn King was heard to state "I believe we have a sound strategy for overcoming such a problem ... " and was then seen walking slowly towards the printing press overdrive switch ...
4. jack c said...
Today's Citywire - Is the UK heading for a sovereign debt crisis?
Gilts have come under further pressure in the last few days, with investors advised to brace for more pain in the near term at least, following the announcement by one of the world's biggest bond fund managers yesterday that it was selling UK government debt.
Pimco, which has $940 billion of assets under management - said it would be reducing its exposure to UK government debt ahead of the closure of the UK's quantitative easing programme, due to fears that the wrapping up of the policy will result in a lack of buyers.
Full story @ www.citywire.co.uk/adviser/-/news/adviser-news/content.aspx?ID=374835&re=8002&ea=118560&Page=1
5. tom101 said...
Bye bye savings. Where will the £ go i wonder......
6. Fra Paolo said...
There is, I suspect, going to be a relationship between the timing of the general election and this impending debt crisis. Bondholders are going to want to strengthen their position against any incoming government by compelling some kind of action before new hands take the reins. Brown therefore either has to put up a plan the markets believe in, at a potential cost to his ability to manoeuvre for votes, or call an election quickly, in order to defuse the bondholders' bombshell.
It also might be a sign that bondholders no longer have faith in a Conservative victory.
7. fallingbuzzard said...
No, they just don't like risk. But don't worry, all of the UK pension funds are ready to pick up the slack. Incidentally, thats us.