zugzwang

Can you smell something burning? The wreckage of yesterday's Treasury auction, perhaps? The primary dealing banks were left having to eat 25% of the issue. Probably explains today's stockmarket rout. https://www.barrons.com/articles/treasury-auction-bond-yields-stock-market-db08c04b 30-Year Treasury Auction Breaks Bad, Sinks Stock Market The Treasury’s auction of 30-year bonds on Thursday went about as badly as it could, indicating investors are reluctant to own long-dated government securities. At the auction of government debt that matures in 30 years, investors were awarded 4.769% in yield, 0.051 percentage point higher than the yield in pre-auction trading. The difference between the two yields—called a tail—indicated a weak auction where the U.S. government had to entice investors with a premium over the market to buy their debt. Primary dealers, who buy up supply not taken by investors, had to accept 24.7% of the debt on offer, more than double the 12% average for the past year. “Today’s 30 yr auction was outright bad,” Peter Boockvar, chief investment officer at Bleakley Financial Group, said in a research note.

A tax cut makes zero sense. No money has been found down the back of the sofa, the UK has merely borrowed a slightly smaller sum than had been 'forecast' (i.e. guessed at) by the OBR last year. Today's Q3 GDP print shows that the economy has flatlined again. Tax expectations (and economic growth) will be need to be revised down accordingly.

Deplorable episode and a fitting punishment.

Yup. The Rich Men North of Richmond.

They've done a fantatstic job. A number of mass demonstrations have taken place, peacefully and almost entirely without incident. British citizens enjoy the right of association and the freedom to protest. We won't be shouted down or silenced by Trotskyite agitators like Sue Ellen Braverman or her Israeli sponsors.

Apparently there's a widespread belief on the Street that the Fed is somewhere near the peak of its 'rate cycle'. Heads up: there is no rate cycle. The Fed sets its target rate on the rate conditions that currently prevail in the market. They have stabilised for the time being. Maybe the trillion in cash still sitting in the Fed's RRP slush fund has something to do with it? If it's based on the expectation of a material reduction in the T-bill supply coming down the pike then it's wrong. Sometime next year the RRP cash will be all gone and the shit will really hit the fan. Either Genocide Joe calls a halt to his military adventures or he massively expands the money supply to pay for all those pesky T-bills by restarting QE. The inflationary consequences of that could prove to be very hairy indeed.

That's a terrible idea, sb. Risky as hell. The Boyz are full of tricks and they've always got something to sell. Get on the executive elevator and tell the c-suite to cease and desist. Threaten to resign if you have to but just tell them no!

FWIW I think Truss belongs more to the Spiked/Trotskyite camp. Committed to a permanent revolution against the Establishment, which they falsely equate with the 'woke' blob, or progressive Left. Sunak imagines himself to be a Tech Bro but no genuine Libertarian would serve as Chancellor of the Exchequer.

Braverman is an out of control Trotskyite, committed to the cause permanent revolution. As is Liz Truss. Sunak is a political chameleon w/o principle or convictions of any kind.

Indeed. And why has the UK spent the last thirty years fighting a succession of wars in the Middle East? We made it our business. It's profoundly disrespectful to the servicemen and women who fought in those conflicts to pretend otherwise.

What happened in 2007/8 was a systemic market failure. Banks that should have been censured for excessive risk taking were able to disguise their risk exposure by continually removing assets/liabilities from their balance sheets and refinancing them via the shadow banking system of non-bank financial intermediaries - the ultimate free market, beyond the reach of any local regulator or central bank. The excessive reliance on credit derivatives required to accomplish this feat led to a cascade of defaults across multiple shadow balance sheets as liquidity disappeared from the market following the simultaneous collapse of two hedge funds belonging to Bear Stearns in the summer of 2007 (stochastic debt instruments fail unpredictably in the absence of a continous liquidity bath). As the shadow leverage unwound so the orginal liabilities began to be returned to the originating banks, overwhelming their notional equity. Institutions that by then had become much too big to fail.

My views haven't really changed! I believe the UK economy is already contracting (see the latest M4 print) though we'll have to wait until early 2024 before a formal recession is declared. The EU economy is also contracting. The US looks ready for an almighty stock-market crash and a recession off the back of that. Love to see it sooner but that probably won't arrive until next year. UK house prices will continue to slip next year as per 2023. Sunak's pre-election bribe might hold the numbers up until Starmer takes over then down we go again.

Sunak says debt is falling! https://uk.news.yahoo.com/sunak-says-uk-debt-falling-180053350.html

Or dare I say it, a pushbike.

Prediction from an estate agent, or wish fulfilment fantasy?