00:00It's a big week for the UK. I think the market is pricing quite a hawkish profile now for the
00:06Bank of England. Too hawkish? I'd say so. I'd say so. It's not impossible to see both the Bank of
00:13England and the ECB deliver the type of tightening that's expected for this year. But conditional on
00:18that, it seems quite unlikely they wouldn't reverse a bit of it later down the line. And
00:23that's not priced to either. We're pricing hikes and then we're pricing a continuation of that.
00:27So I mean, just on bonds, what exactly is going on? Because is it a fear that, you know,
00:33that will be out of control if Keir Starmer gets replaced? Is it that the chancer may be changed
00:38in a kind of cabinet reshuffle? Or is it really just energy prices and the fact that the UK economy
00:43is so dependent on those? I think first and foremost, it's a global phenomenon, a global
00:48phenomenon. We've seen a sell-off in the US. We've seen a sell-off in Europe. So it's been a
00:53global
00:54duration sell-off across developed markets. So that's sort of the main driver. I think you
00:59then have the additional kicker for the UK, as you point out, that there is political uncertainty.
01:04Currently, the government is quite fiscally conservative. And that means if the market's
01:08fearful of any new type of government set up, it's not going to be as fiscally conservative.
01:13It could be the same, but it's not going to be more. And so that adds an additional kicker
01:18to the market. I'd say from a fundamental perspective, though, if one looks at the UK and looks at projections
01:23for bond supply, net what's going to redeem this year and net what the central bank's doing, net
01:29supply net of QE stroke QT. In the UK this year, it's actually going to fall by about 20%. That's
01:35quite supportive from a fundamental perspective for the bond market if we can get over these
01:39political concerns. Yeah. Are you expecting GILT to go higher even from here? We're not. We're not.
01:45We think that that's actually one of the DM bond markets that should be a little bit more
01:49insulated given how cheap valuations already are.
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