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ianbeale

Numpty Question

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If long dated gilt yields fall the expectation is that the cost of borrowing will fall in the future. However falling interest rates in the future are likely to be in response to a deflationary recession, and all the cheap money in the world wont fix structural problems in an already highly indebted economy. See Japan 1990 to present.

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If long dated gilt yields fall the expectation is that the cost of borrowing will fall in the future. However falling interest rates in the future are likely to be in response to a deflationary recession, and all the cheap money in the world wont fix structural problems in an already highly indebted economy. See Japan 1990 to present.

are you saying that all the red figures here

http://newsvote.bbc.co.uk/1/shared/fds/hi/...ilt/default.stm

mean that IRs are likely to fall in the future??

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are you saying that all the red figures here

http://newsvote.bbc.co.uk/1/shared/fds/hi/...ilt/default.stm

mean that IRs are likely to fall in the future??

If the price of the bond drops the yield rises. The red ink is the value of the bond/gilt falling due to IR rising. In the US this is happening at a rapid pace despite the Fed's action. The rise in IR in the UK will happen regardless of what Gordon decides to do with the BoE rate.

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Remember the short term IR is controlled by the BoE, the long term rates are controlled by the bond holders. So in effect these guys can really do damage to an economy if they felt that their investment was under threat.

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are you saying that all the red figures here

http://newsvote.bbc.co.uk/1/shared/fds/hi/...ilt/default.stm

mean that IRs are likely to fall in the future??

Precisely the opposite.

Price and yield are inversely related. i.e. When the price falls, the yield rises. And money market yields are used in setting mortgage rates.

You may find this site shows the situation more clearly:

http://www.bloomberg.com/markets/rates/uk.html

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  • 302 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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