Will UK Gilts Smile or Frown?

The UK Government is set to release the next Budget on 26 November, the day before the US Thanksgiving holiday. The run-up to the announcement is full of ‘pitch-rolls’ and odd briefings. The OBR forecasts, particularly the productivity downgrade, compelled the Labour government to find ways to create 30bn of fiscal headroom. At the same time as the Labour government is cobbling together what the FT calls is a hotchpotch plan; and there are worries about whether a leadership challenge is in the offing. While there has not been the Liz Truss type of volatility rocking the Gilt market, it worth noting that yields are above all other G10 countries and the British pound has been weakening on a relative basis.