Autumn Statement 23: Markets reflect 'mild disappointment'
The value of the pound declined slightly against the dollar following Chancellor Jeremy Hunt’s speech, from $1.254 to $1.246.
The FTSE 100 declined 0.3% today, while the domestically-focused FTSE 250 has risen 0.7%, according to data from Morningstar Direct.
Autumn Statement 23: GDP forecasts 'slashed' as inflation expectations climb
The value of the pound declined slightly against the dollar following Chancellor Jeremy Hunt's speech, from $1.254 to $1.246.
Meanwhile, the yield on ten-year gilts ticked up, falling from 4.11% before the Autumn Statement to 4.05% during, before surging to 4.16% as it concluded.
James Lynch, fixed income manager at Aegon Asset Management, described the Autumn Statement as «a mild disappointment but not a disaster for the gilt market».
He explained: «The market was expecting somewhere around the £10bn to £15bn area in cuts to gilt issuance this year but only got £0.5bn, taking total gilt sales to £237.3bn, due to the measures announced today. Treasury bills were, however, reduced by £10bn.»
Lynch added that in the short term, the focus of the gilt market will be the extra auctions that were not expected, while in the medium-term it will be the economic fundamentals of GDP, inflation and interest rates.
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Neil Mehta, portfolio manager at RBC BlueBay Asset Management, argued that as polling continues to remain poor for the government, he expected «further desperation and unpredictable behaviour heading into the full budget in April».
«We continue to think the policy mix will become more convoluted and investors should be wary of holding UK assets such as the pound or gilts,» he added.
Draft
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