00:00First of all, let's just take a step back. What is the guilt market's overall take on not just
00:04Andy Burnham, but his new chancellor of the exchequer, John Healy? It's certainly been a
00:11choppy week in the guilt market, and there's a lot to digest. John Healy came as somewhat as a
00:17surprise pick for chancellor, and he's being viewed as somewhat of a safe pair of hands. He does have
00:24some former treasury experience. He was the former defense secretary under Keir Starmer,
00:29and he has in the past pushed for more defense spending, so perhaps bond investors are looking
00:34to see how he plans to pay for that. But by and large, there's a lot of unknowns at the
00:40moment
00:40as to what his economic policies might be. And Burnham said he would seek greater
00:46flexibility within the fiscal rules. How are people interpreting that? Well, that was not
00:53interpreted so positively by the bond markets when he made those comments on Monday. And while
00:59globally yields have been quite high, UK bonds definitely reacted to those comments, somewhat
01:06of a shadow overcast from 2022 when Liz Truss and her mini budget caused a lot of volatility within the
01:14UK bond markets. And so any sort of inclination as to meddling with fiscal rules, even though he didn't
01:20say that explicitly, he said he would look for flexibility within the fiscal rules, was taken
01:24as a sign, not necessarily such a positive sign by the gilt market. And you point out that we've seen
01:30a bigger move in gilt than we have in sterling. Why do you think the gilt market is more sensitive?
01:37A lot of that is to do with Liz Truss. From my conversations with investors, there's just this
01:43overhang and a lot of people discuss how the UK acts like an emerging market in terms of its gilt
01:50market just because it is so volatile, whereas sterling has a few other things that are simmering
01:56under the surface. There's also the Bank of England meeting next week, which could play into what
02:04sterling might do. But by and large, it's sort of fizzled in the background OK, and it's puzzled a lot
02:10of investors. But it seems to be that bonds just are more volatile and more sensitive to any
02:15headlines that are coming out of number 10 Downing Street.
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