The press didn’t like Darling’s budget – and neither do the markets. What Darling didn’t say yesterday is that the Treasury is looking to borrow £243 billion from the City by the end of the financial year – this info was slipped out by the debt management office (link here). Brother, can you spare a quarter of a trillion quid? The markets are not sure they can. Gilts are being hammered today – biggest single day sell off for some time – 13bps so far this morning on 10yr gilts. They now stand at 63bps above German bunds, the widest since the crisis started.
On another measure, Credit Default Swaps, the UK is being hit hard again. It now costs $85,000 to insure $10 million of UK debt against default – against just $24,000 for German debt. This multiple is at a record high. There is no other economic news about: this is all reaction to the Pre-Budget Report.
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