PWLB Certainty Rate Has Changed a Lot Stuart Jones sjones@arlingclose.com

 

The changes that have occured over the last two months have been beyond what most market forecasters had predicted. The fluctuations both up and down have been off the back of government policy, the assorted unfunded tax cuts, combined with limited information on the subsequent spending cuts, if any to level the budget to any degree. The complete funding hole has driven markets' beleif that there will be a significant increase in borrowing, and subsequently government bond investors are requiring a higher return on their investment. Consquently, yields have risen at a rate unseen before, to such a degree there was deemed to be a risk to financial stability for some pension funds. This prompted Bank of England intervention of up to £5bn/day. The immmediate impact was a decline in yields on the long end. The persistent rise has continued and the Bank of England support is due to end this Friday 14th.