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.