00:00Moena, good morning to you. So it's all about energy. Everything comes back to energy. Inflation expectations, bond market moves,
00:07volatility in all kinds of asset classes. It all comes back to energy. What are you watching?
00:12Well, I think that today I'm obviously watching. We've got Brent coming down again, which is encouraging, but I'm not
00:20very convinced that it's going to be sustained.
00:22I think we've still got all of the underlying causes of volatility. And I think volatility is really the word.
00:28We've seen so much shifting in directions this week.
00:34But overall, the trajectory has been up, you know, closing at sort of higher since 2022.
00:39Yesterday, it's a really dramatic increase, and that is having a ripple effect across global markets, inflation expectations in particular.
00:49And that is now really being seen in pricing for central banks, which is having a big impact on other
00:53assets.
00:54But I think in terms of the energy prices themselves, I think there's not really clarity in terms of any
01:01sort of stability, which would see a really sustained recovery.
01:08So I'm not optimistic that it's going to be sustained over the weekend.
01:11Bring us some optimism on the UK. Is there anything to say about the UK?
01:14Yeah, I mean, UK gilts sold off aggressively and more aggressively than their European counterparts yesterday.
01:19Yields shooting higher. What is the picture for the UK right now?
01:22I mean, it's not a good day. It's been a terrible week, in fact.
01:26But the two-year yield rising about 40 basis points yesterday, really quite phenomenal increase as traders are now pricing
01:35in three interest rate hikes from the Bank of England this year.
01:38A few weeks ago, we were expecting two cuts. So we've seen gilt yields rising a lot of the shorter
01:43end.
01:43But public deficit data this morning that was worse than expected for February, so before all this started, really could
01:51start to see that.
01:53Quite a lot worse, wasn't it?
02:08Well, because you start to get the sense of political risk.
02:10And what is the government going to do about the sort of energy shock that when we come out of
02:15the price cap in July, you know, they are going to have to take some action.
02:18And the gilt market historically has not liked that at all.
02:21From other European leaders, we heard from Christine Lagarde, we just heard from the Cypriot president, you know, that any
02:25response has to be targeted.
02:27But we'll see what the UK context brings.
02:29On gold, I guess you're watching that just like everybody else.
02:32We've had a lot of conversations about whether this is still a haven on this programme.
02:35Well, it's not behaving like a haven at all anymore.
02:38And that's mainly because you've, as central banks globally, are expected to become more hawkish.
02:44We've had, you know, even rate cuts priced out from the Fed.
02:47That takes away quite a lot of its appeal.
02:49And we're also seeing metals more broadly hit by the destruction of demand.
02:55And that's a real concern for commodities.
02:57And I think gold is following suit at the moment, just losing its haven appeal.
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