Foreigners Shun Gilts on Hard Brexit Talk, as Hallowe’en Verdict Awaits

The bond vigilantes are waiting for October 31 to learn whether powerful foreign funds are fleeing the Gilts market

by Ambrose Evans-Pritchard

The bond vigilantes are sharpening their knives. The last five trading sessions have seen a sudden and potentially ominous shift in the reflexes of the Gilts market, a sign that ‘hard Brexit’ rhetoric has rattled global debt managers.

“For the first time, foreign investors are beginning to question the credit-worthiness of the United Kingdom, “ said Vatsala Datta, UK rates strategist at RBC.

We will find out how serious it is on October 31 – Hallowe’en day – when the UK Debt Management Office publishes its monthly data on foreign holdings of Gilts. Central banks, sovereign wealth funds, and the like, currently hold £503bn of British public debt or 27pc of the total, a bigger share than UK pension funds and insurance companies.

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