UK Rates & Government Bonds

Dated events

1. June 24, 2016 · Brexit referendum result: UK votes to leave the EU, pound hits 31-year low
   Britain voted to leave the European Union, a result most investors had not expected. The pound fell sharply because people feared the UK economy would shrink and the Bank of England would have to cut rates, while UK bank and property shares dropped as their future earnings looked uncertain. The Bank of England cut rates and restarted bond purchases within weeks to support the economy.
2. Sept. 23, 2022 · Kwarteng's mini-budget of unfunded tax cuts triggers a gilt market sell-off
   Chancellor Kwasi Kwarteng announced large unfunded tax cuts, shocking investors. Lenders and pension funds that held UK government bonds suddenly faced huge losses, and the pound dropped sharply because people feared the UK could not afford the plan. Within days the Bank of England stepped in to buy bonds to stop a spiral, and the Chancellor was replaced weeks later.
3. Sept. 28, 2022 · Bank of England announces emergency purchases of long-dated gilts
   The Bank of England announced it would buy long-dated government bonds on an emergency basis to prevent a collapse in pension funds. Pension funds used complex strategies that required them to post cash when bond prices fell, and they were running out of money to do so. The intervention calmed things temporarily, but trust in UK economic management remained badly shaken for weeks.
4. Nov. 3, 2022 · Bank of England raises Bank Rate by 0.75 points to 3%, largest rise since 1989
   The Bank of England raised its main interest rate by 0.75 percentage points to 3%, the largest single increase since 1989. Higher borrowing costs worried homeowners, banks, and property companies because mortgages and loans became much more expensive very quickly. UK house prices began falling in the months that followed.
5. June 21, 2023 · UK inflation stuck at 8.7%, core at 31-year high, lifting gilt yields
   UK government borrowing costs jumped after data showed inflation was not falling as fast as hoped, raising fears the Bank of England would keep interest rates high for longer. UK insurers, banks, and property companies saw their share prices fall because expensive borrowing hurts their businesses directly. Gilt yields stayed elevated for several more weeks before gradually easing.

Assets named in this scenario · 12

AvivaBarclaysBritish Pound (GBP)HSBCiShares MSCI United Kingdom ETFLegal & GeneralLloyds Banking GroupNatWest GroupPrudentialSegroStandard CharteredTesco

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