Government bonds under pressure as pubs warn of last orders without assistance

This week the sell-off in government bonds continued on the back of not much more than a change in sentiment.

The outlook hasn’t really altered but investors are expecting both inflation and interest rates to remain higher for longer. The UK is likely to see a more severe downturn than other developed markets. However, Goldman Sachs’ prediction of inflation at 22% is based on gas remaining at last week’s eyewatering levels and it has already fallen 35% since last Friday. Goldman’s base case is for inflation at 14.8% – bad but not that much worse than previous forecasts.

Meanwhile the pub industry has joined the chorus of warnings about the severity of the energy crisis. Without the benefit of price caps, pubs renegotiating their energy supplies this autumn are facing huge increases to their bills but say they can’t pass on the rising costs to customers. Liz Truss is likely to be PM this time next week and we are about the see if she can stick to her campaign promise of no handouts. Boris Johnson has limited his help to suggesting people buy a new kettle to save energy, but no prime minister wants to be blamed for the death of the British pub. 

For the following stories, please click on this link*

  • Global – Bonds tumble on expectations of more aggressive hikes
  • Europe – Employment remains strong as inflation continued to rise
  • Equities: Pubs call closing time without help with energy costs

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