00:00It's been quite a week. You can either look at it through the lens of the bond market, which has
00:04been a bit insane.
00:05You can look at it through the lens of the oil market. How does it all fit together? What have
00:07we learned this week?
00:09I think we've learned that oil is still king when it comes to what's happening in the bond markets.
00:15And particularly, I mean, looking at gilts, we've seen extreme fluctuations in double-digit basis point moves in both directions.
00:23And we were just looking at the two-year yield, and it's actually on course to end the week, basically
00:27unchanged.
00:29And that's after not only has it gone up and down on a daily basis, but intraday.
00:33We've seen pretty wild swings. It's been pretty relentless.
00:37And as you said, it's actually becoming harder to decipher exactly what oil is moving on,
00:42which I think in some ways makes it even more troubling for trying to predict where we're going.
00:47But I think that's in quite an interesting contrast to what's happening in the U.S.,
00:50where things have been moving, although there's a bit of recovery today, quite clearly in one direction.
00:55And we've seen double-digit yield moves across the curve this week overall.
01:01Yields down on gilts today, at least.
01:04We've had a couple of members of the BOE suggesting that they're getting ready for hikes.
01:08We know about the energy sensitivity of the U.K.
01:10We've got the budget coming up.
01:13Gilts, do we package them all together with what's happening with the global bond sell-off,
01:16or is there idiosyncratic issues that we need to be zeroing in on when it comes to the gilt story?
01:20Well, I think with the gilt story, where it differs perhaps from the global bond story we're seeing
01:25is that the economy is not that great.
01:30There are concerns still about the labour market, about economic growth,
01:34and actually what is going to be coming up in the budget and what that might mean for confidence.
01:39And that, I think, is putting a bit of a halt perhaps on some expectations
01:43for what the Bank of England will do in terms of hikes.
01:46And although we had two policymakers coming out yesterday saying the case for moving towards a hike is growing
01:53and the risk of second-round effects is increasing the longer that we see elevated oil prices,
01:58what they were also saying was we sort of need to wait a little bit more.
02:02We're not quite there yet.
02:02And there are those concerns about the economic backdrop,
02:06which perhaps in some ways prevents some of those second-round effects from passing through,
02:12which is not what we're seeing in somewhere like the U.S.,
02:16where actually businesses are doing very well in economic activity.
02:20The data is coming through showing it's quite strong,
02:23which actually therefore sort of adds to the case for heights.
02:26The people who are of one for the most.
02:26Those who can disrespect us,
02:26Travis will not help us as well as the government,
02:26We're here today in What these risks will look at.
