THE NEW YORK TIMES: The market’s resounding rejection of the new British government’s plans for tax cuts and borrowing continued Monday as the pound briefly fell to its weakest level against the U.S. dollar on record.
After a historically bad day on Friday, the British currency plunged as low as $1.035 in the early hours of Monday morning, before recovering to about $1.08, down 0.5 percent for the day. It also weakened slightly against the euro.
On Monday, prices for British government bonds plummeted, and yields surged, sending borrowing costs to new highs. The 10-year yield, which influences mortgages, business loans and other types of debt, hit its highest level in more than a decade. It traded at around 4.15 percent on Monday, double where it was a month and a half ago.
As traders dumped British assets, analysts have said the government’s plan to quickly grow the economy through deregulation and tax cuts, which will require tens of billions of pounds in additional borrowing at a time of rising interest rates and high inflation, was a gamble. » | Eshe Nelson | Monday, September 26, 2022
Clearly, Kwarteng’s voodoo economics has failed to impress the markets! – © Mark Alexander
