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Realistbear

Bo E's Vigilance Stimulating Inflation Protected Bond Sales

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http://www.bloomberg.com/news/2010-11-10/king-price-struggle-prompts-investors-to-seek-protection-inflation-bonds.html

U.K. inflation-linked bonds are rebounding from the worst quarterly drop since the start of 2009 as Bank of England Governor Mervyn King struggles to contain rising consumer prices.

Merv will no doubt have been told by his bosses at the Treasury to remain "vigilant"* and do nothing to threaten the housing market which is already on the brink of a very long overdue correction. Even a small hike will send house prices into full crash speed. Vigilance will continue to be the order of the day until the bond market calls time and rates are forced up by the market when it sees excessive risk.

___________________________

*Watching intently but not acting

Edited by Realistbear

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The gov't took away our index linked NSCs! :angry:

Suggests they are expecting inflation to rise & continue, and that they don't mind if that happens.

Actually I didn't know that 'not acting' was part of the meaning of 'vigilant'. :blink:

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Even a small hike will send house prices into full crash speed. Vigilance will continue to be the order of the day until the bond market calls time and rates are forced up by the market when it sees excessive risk.

Yes makes you wonder how much longer B of E will be able to hold off raising rates.

Interesting article ffrom Martin Lewis, on his site, discussing the history of interest rates, and giving a warning to mortgage holders about the risk of rising rates. ...."Every one needs to realise the current interest rates are an anomaly...."

http://blog.moneysavingexpert.com/2010/11/04/a-mortgage-warning-take-a-look-at-the-uk-interest-rates-history-since-1694/

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Yes makes you wonder how much longer B of E will be able to hold off raising rates.

Forever.

If they raise rates just a couple of percentage points all they will achieve is an inversion of the yield curve and then the short rate will be crushed back down by investors buying gilts.

You can't have a situation in which the bank rate is say 2% and the rate on 3 month bills is 0% or goes negative.

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  • 140 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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