Spiralling Gilt Yields Spell Trouble for the UK

[@scarreddwarf9316]

On a completely unrelated note. It is 5am and I am watching this in my shower preparing to go to uni. I am so grateful for u guys. I started watching this podcast last year in prep for my investment banking interview but even now after I’ve got the job I still find this so interesting to listen to. I don’t think I’ve ever commented before and I hope you guys read this - we(or at least I) really appreciate this you guys fill such a useful niche and I hope yOu never stop doing this

[@pierscurran7786]

We do indeed read every comment - thank you so much for you message :)

[@iliyasuddin980]

+1

[@thewrightoknow]

New subscriber, great education and dialogue with excellent questions! Looking forward to coming back!

[@AmplifyME-Hub]

Welcome to the show!

[@William-y1d-l5c]

I am impressed with your update on these stocks, now my question is which is best to buy at this time. I have some liquid assets to diversify.

[@duanec.sutherland5292]

In no order: 1) VOO 2) QQQM 3) SCHG/VUG 4) VTI 5) SCHD/DGRO. Personally I put down 1.2m$ on few ETFs, still diversifying. it was this time last year I made my first break through with a liquid 370k. Handed it to a trader here in TX, I get weekly pay out which I put back on long term ETF's. Tesla will be a huge buy for me when the market bottoms.

[@William-y1d-l5c]

Thank you, I already added VOO and QQQM, can you share this Pro with me.

[@duanec.sutherland5292]

Yeah, Lorrie Greta Hillard use her name to look her up.

[@Neil-l7v]

SPY, QQQ, IWM, and currently TLT. I only have 4. Lorrie firm grows a good portion of my diversification, I live in Connecticut.

[@red00127]

No economic background whatsoever. This episode explored many related issues so effectively. It's created a framework to understand more fully the performance of the economy over time. Very impressed. Thanks

[@sbain844]

21:30 The real risk is not default, it's that the entire financial system is increasingly insolvent as yields rise because it is financial institutions that own the bonds (rising yields means the asset side of the financial institute balance sheet is being destroyed). Ultimately this will lead to more bailout money, which will in turn lead to sky-high inflation and even higher yields etc etc. Yields are rising now, even as the BoE keeps cutting interest rates, precisely because the bond market is sniffing out the coming inflation.

[@vsatrader]

They will have to hedge out that risk, else they will run the risk of bankruptcy

[@userumbleandgettr4freespee501]

Good riddance old system

[@apisincognito8173]

Both of the presenters here are absolutely captivating in this piece. Great stuff

[@jeremyquantrill4137]

Great discussion...just one point that you think BoE will cut interest rates in 2025 but as you say 30Y Gilts reflect Inflation expectation so with all the inflationary elements aligning in April (Energy reversal to add to inflation, Employers NICs, Minimum Wage, Food Price rises, possible Tariffs) why do you think the BoE wont be forced to increase rates in the Summer?

[@pierscurran7786]

Well, yes indeed! A BoE hike in 2025 should not be dismissed. Politically this would be a bit of a disaster though, which is probably enough of a force to mean it doesn't happen. But... if inflation does start getting out of hand on the upside again and they HAVE to hike, then we're in for a very rocky economic period in the UK as stagflation properly takes hold. Lets hope there aren't any hikes :)

[@userumbleandgettr4freespee501]

They will make the people eat the inflation, so they can continue to issue scam notes to fund their inverted utopia. Probably yield curve control, or trying to crack other currencies and govs of the world first. If they were smart and cared about the citizens, they would abandon their Russia project as well as the green climate scam and lower inflation with lower energy prices

[@henrydilley7009]

Great episode and explanations to start the new year. Thank you Ant and Piers.

[@seleannia4511]

Thank you so much! I love pier and his view. I watched the other video from 4 weeks ago of him and it helped me a lot with interview at GS!

[@mda99das]

As a UK investor, if the long bond yields keep going up, then the price that they are at will fall. How does this affect money market funds?

[@JBZ1533]

In theory money market funds should not be unaffected as the rate they pay represents the very short part of the curve. They will very closely mirror the bank base rate, which is currently 4.75%

[@delladog]

Great video, great explanation, well done

[@MuckyMucky-z3c]

Foreign investors saw a 4.4% devaluation against the USD over last year. US 10 year gives 4.7%. If late 2022 is repeated, inflation will steepen in the UK. Repo use in UK is substantial indicating a liquidity issue. Why touch 10 year gilts?

[@skskskskskskssksksks]

Thank you guys! Really informative 👌

[@DarrenSmith-tq2xz]

The short end is controlled by the markets and there going to loose the long end of guilts and this is going to be due to issueing to many short term guilts they're going to be called Owl Bonds the reason is because when primary dealers come to sell they'll say to who to who

[@remiewatkins8032]

Awesome job Guys love your work Thanks so much for posting

[@AmplifyME-Hub]

Thanks as always for watching! HNY

[@brad9205]

There is alot of talk of these tax rises being inflationary but the rises don't create new money; they just move the spending power from business to government. Businesses that can will increase their prices meaning ultimately the spending will move from the man/woman on the street to government. With less spending power discretionary spending will drop, putting many businesses at risk of failure. Those businesses may lower their prices in an attempt to stay afloat. I haven't watched the whole vid but there doesn't seem to be mention of the BOE selling bonds back into the market. This started in early 2022 and aligns very well with the increase in yields. I predict the QT program will end (QE would then be a clear case of money printing). It won't fix the problems but may buy some time.

[@itsJamilAhmed]

Another great episode 👍🏼

[@mrkdavys3498]

Also look at who is (part) back-stopping Ukraine debt, the UK. Ukraine defaulted on its debt in Aug'24. I understand that the UK's exposure is between £50-£150billion to the bond holders.

[@thelikesofus324]

I was shouting this at the screen when watching Piers explain the reason for rising yields 🙂Great show, I will certainly watch their next talk.

[@terryjones9987]

Excellent explanation. So glad I found this video

[@nickseccombe1357]

Great info, clearly explained.

[@Twjc12]

Thanks guys and happy new year, also just have a look at Uk house builders stocks. Humm

[@Carausius92]

Its very entertaining when you guys starting to use sensational terms such as "apocalypse", "Armageddon", "Voldemort" and "inflationary for the planet" 😄 Great works to explain the current situation as usual, thanks a lot!

[@mikewilliams7195]

Who sets the yield price? Is it the Market? Investment banks etc?

[@vsatrader]

So buy the 30y Gilts as near to 6% as you can, then liquidate when the curve flattens then, and take the capital gain.

[@Pete-o1i]

Excellent content

[@Phil_D_Waller]

baffles me that a state with its own currency which it can freely create via adding new numbers into the consolidated fund at the bank of England needs to borrow £s but hey what do i know!

[@JimboJimbo-i4i]

There is no underlying link between yields to the actual economy is there? It’s just a measure of confidence in the economy as far as I am aware

[@ldn876]

Enjoyed this

[@peterbedford2610]

Headlines are all clickBait nowadays.

[@AmplifyME-Hub]

We don't disagree!

[@jimbeattie3641]

Just to remind everybody, inflation only happens when new money is produced.

[@simapark]

5% is not a 'good yield ' . Real inflation is over 5% so you have no real yield . If rates go up to say 7% your 5% bonds are going to be worth less than what you paid for them if you need to sell them before maturity

[@userumbleandgettr4freespee501]

Pay your taxes, take the jabs, work the cubicle, and loan the gov money you’ll get back at a lower amount so the gov can pound you harder, like a good lad and the police will leave you alone 😂 If not, then maybe you prefer the gulags 😂

[@Nick-from-norfolk]

It’s about REAL yields not nominal yields. ALL global government bond yields are rising. If hawkish comments by BOE indicate that they want to squeeze inflation out then people will have confidence that long term inflation will be low and therefore the real yield curve will be flat. If BOE is not aggressive then market will expect real rates to rise and therefore the yield curve will be positive. Theoretically yield curve should be flat or a marginal inverted curve. You have to look at supply generally and which part of the curve issuance will happen. You have to look at demand as well. Mortgages 25 years plus, corporate bonds 7-10 years, banks 2-5 years and money markets 3months to 2 years. It’s about confidence in BOE and sensible political management. Both of which are thin on the ground at the moment. Because of the gross stupidity of the British people to vote Brexit, the pound trades like an emerging market and nobody in Europe is going to help the UK out and the UK is extremely vulnerable to short selling of gilts and sterling.

[@AmplifyME-Hub]

Thanks for sharing your thoughts Nick

[@AM2K2]

cheers

[@GaryKennedy-g7p]

anyone who has written capital investment proposals knows that to calculate the payback period you have to do an Internal Rate of Return or Discounted cashflow analysis ...... to convert future cashflows to present day values .... via projection of future sales .... and discounting them at expected inflation rates they are talking of the same thing re bonds .... especially long bonds .... I wouldn't touch them personally

[@1ForTheShieldz]

Labour are such a mess 😢

[@gca259]

It cannot have helped when Reeves forecast £12bn (approx.) of 'headroom' in her budget, guaranteeing a huge payout for the banks as they pocket the lot...

[@US-SPX-500]

Unlike the US, the UK cannot grow its way out of debt because there is simply no growth to begin with as technology sector doesn't even exist over there

[@tomd5678]

I put all of my investments in USD after Brexit. This is the reason

[@xfoxuk]

Pound getting Pounded

[@rd716]

You have mischaracterised trump’s policies. Tariffs in and of themselves are not a policy. His policy is to put America first, that means that US will not underwrite Europe’s security for the same price. Americans don’t get free healthcare, cheap education and the luxury of taking the month of August off and meanwhile supplement Europe’s defence - countries who do get those luxuries. Tariffs are a mechanism of levelling this.

[@ironmantooltime]

😂😂😂 literally no one remembers the Bank of England is quantitative tightening whereas no other central bank is selling before term, £100bn a year. How can you not even mention this?! 😂

[@GersderaNioer]

My portfolio doesn’t just cater to dividend stocks. I hold $VFIAX (S&P 500 index fund) in my Roth IRA and $VTI (Total Stock Market ETF) in my taxable brokerage account. Two of my largest holdings. The individual dividend stock positions all complement the index holdings.

[@patricia_657d]

Thats when you hire someone to manage your money. You need a (CFP) straight up! personally, I would invest in ETF's and also love investing in individual stocks.

[@Agatha.wayne0]

I took charge of my portfolio but faced losses in 2022. Realizing the need for a change, I sought advice from a fiduciary advisor. Through restructuring and diversification with dividend stocks, ETFs, Mutual funds, and REITs, my $1.2M portfolio surged, yielding an annualized gain of 28%.

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Thanks for sharing, I just looked her up on the web and I would say she really has an impressive background in investing. I will write her an e-mail shortly.

[@allykhan8594]

The market sees a more weaker pound (sustained) because of higher inflation, debt and low growth. They are betting against the u.k economy.

[@brunoyvres4939]

We need to increase tariffs on tesla and bring in Chinese evs

[@Twjc12]

The rabbits are infinite lol

[@AmplifyME-Hub]

To infinity and beyond! 👀

[@alanread4763]

Operation Twist 2011. Close but no cigar !!!!

[@crustyzimmerman3324]

He voted Labour so he could make content and profit when everyone went to hell in a hand cart. How much does it take to buy off Jess Phillips? Oh just a Ministerial salary will do fine thanks…😂😂😂

[@1ForTheShieldz]

Liz had a plan for real growth. These guys dont. Rates are higher now than liz but where is the resignations and the fuss? Labour need to start cutting and take back payrisises and stop benefits for foreign migrants.

[@allykhan8594]

Men with E.D will see and feel more growth in the 5 years than the u.k economy.

[@justinertia6835]

I left after he said Uk gvt centre left.

[@DarrenSmith-tq2xz]

Global debt market meltdown has just started let's see if central banks come in

[@amirkhan235]

??? We were at 1.34 in Aug-Sept 2024 against the dollar and now at 1.22 Jan 2025 - the Pound isnt getting crushed??? Reduce the size of your pinch of salt please, 'expert'.

[@petersmith6520]

That’s 9% in just a few months - that IS getting crushed.

[@Capital194]

Great discussion but (yes here is the but) cut the politics because it is based heavily on opinion. I like the facts not opinion.

[@monkeh86]

Labour are incompetent and inflationary. That’s a fact.

[@freddiearthur2151]

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I'm 37 and have been looking for ways to be successful, please how??

[@freddiearthur2151]

Sure, the investment-advisor that guides me is..

[@freddiearthur2151]

Elizabeth stark

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Same, I met Elizabeth stark last year for the first time at a conference in Wilshire, after then my Life has changed for good.God bless Elizabeth stark

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[@John-c4r1o]

Labour equals inflation.

[@TheStalec]

Labour must be in power all over the western world then

[@andym847]

Labour... centre left 😂😅😂, really... more like extreme far left.

[@jamesholt4449]

more like centre, what made labour extreme left

[@TheStalec]

Hyperbolic nonsense. Labour are centre left in any current or historical political context. Such unhelpful contributions to discussions. The brain rot on social media is dooming us.