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gruffydd

Bonds Tumble As Government Says "no Cap On Taxpayer Risk"

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http://www.telegraph.co.uk/finance/newsbys...payer-risk.html

Gordon Brown has formally announced a scheme to allow banks to exchange cash or shares for a Government guarantee on their "toxic" debts, transferring any losses they suffer from the banks to the taxpayer.

But the Government has conceded that it can't estimate how much taxpayers' money will be on the line in the latest bank assistance package.

UK bond prices fell sharply as the financial markets digested the prospect of further Government borrowing.

Ministers say the new package, which comes only three months after another £500 billion bailout, is vital to restore bank lending and help companies get credit and stay in business.

Edited by gruffydd

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Oh dear.

If nobody else will buy UK bonds then the BoE will have to. That can only go one way:

weimar2.jpg

Has anyone checked the actual yield? At the moment UK 10 year are 3.38% compared to Germany 2.98%, France 3.5% and Spain 3.13% - Hardly a big deal??

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Has anyone checked the actual yield? At the moment UK 10 year are 3.38% compared to Germany 2.98%, France 3.5% and Spain 3.13% - Hardly a big deal??

What's the spread between bond yields and base rates in those countries though?

Government bonds usually have a yield fairly close to the base rate. The ECB base rate is higher than ours so you'd expect bond yields to be higher as well. The fact that they're not in most cases is more than a little worrying.

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Has anyone checked the actual yield? At the moment UK 10 year are 3.38% compared to Germany 2.98%, France 3.5% and Spain 3.13% - Hardly a big deal??
What's the spread between bond yields and base rates in those countries though?

Government bonds usually have a yield fairly close to the base rate. The ECB base rate is higher than ours so you'd expect bond yields to be higher as well. The fact that they're not in most cases is more than a little worrying.

stripping out the base rate:

UK: 1.0338/1.015 = 1.0185

Gemany: 1.0298/1.02 =1 .0096

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Does anyone know how this will affect the price of bond funds? I currently have

M&G International Sovereign Bond Fund and Schroeder Gilt and Fixed Interest and specficially went with those for stability.

Is Gordons spending spree likely to affect the latter?

Many speculate that it's a bond bubble, ergo bond funds are at risk of losses if the puported bond flood of 2009 does happen.

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Many speculate that it's a bond bubble, ergo bond funds are at risk of losses if the puported bond flood of 2009 does happen.

It has to happen as the money has already been spent.

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  • 284 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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