30-year yield explodes

The 30-year gilt yield hasn’t just twitched. Jaws has thrashed out of the water and bared its teeth. The bond vigilantes’ sharks are circling after catching the first whiff of fiscal blood in the water. Reeves can pray all she wants that it’s just a passing snap at the bait, but the predators don’t waste energy unless they smell a feast coming. And with the Autumn Budget looming, gilt markets are already lining up the knives and forks. Once the “fiscal chum” gets tossed overboard, it won’t be a polite tasting menu but a full-on feeding frenzy, with yields ripping higher and the Treasury left flapping like a half-eaten mackerel.

If we needed proof Labours plan for the economy isn’t working this is it! The highest long term borrowing rates for 25 years. Boxing themselves in on VAT, income tax and national insurance means they are scrambling about on the taxes than generate less income, and hiking these to record levels. This is not the way to run the economy economy. The only way to fix this is by breaking a manifesto commitment, but that will be toxic politically. They are out of options though.