Macro Minutes: UK Market Volatility

Key Points

  • The UK faced significant headwinds as the year progressed and grappled with slowing economic growth and hotter inflation than developed nation peers, leading to increased market volatility and investor fear.
  • UK yields rose significantly following the announcement of a new budget, while yield curves in the US and Europe reacted on a smaller scale indicating a lack of systemic disruption.
  • Funding costs for the UK remain relatively low, significantly below the 40-year average, allowing the government to continue borrowing relatively cheaply and likely be able to pay its debts for the foreseeable future.