‘The Financial Crisis triggered by the Mini-Budget is not over’

‘The cost of long-term borrowing for the Government rose to its highest level since the Bank of England launched its £65bn pension bailout, as analysts warned the jump signalled further market turmoil could be on the cards.  Yields on 30-year gilts rose above 4.5pc, bringing them to their highest since going over 5pc just before the Bank’s intervention on 28 September. 10-year gilt yields also rose by 2.5 basis points at 4.25pc. The surge in borrowing costs came as the Bank announced it will ramp up its market intervention before it closes on Friday. It will also launch a scheme to provide liquidity to banks whose clients are struggling with sudden cash calls. Its decision comes after eight auctions so far in which the Bank offered to buy £40bn worth of bonds but only succeeded in buying £5bn worth. The Bank has been purchasing the gilts using newly created money in a process known as quantitative easing. However, analysts have warned that the intervention fails to adequately address the underlying issue. Antoine Bouvet, senior rates strategist at ING, said: “The suspicion is that risk reduction by pension funds has been too limited so far. “The question is do they have enough cash to meet new collateral requirements if the gilt market sells off again, as the gilt purchases by the Bank of England end this week.
“I think the fear is that the answer’s no and that it will trigger the same snowball effect that we had two weeks ago.”’ (Matt Oliver, the Daily Telegraph online 52 minutes ago).