Access both platforms from your single Saxo account.
London Quick Take – 26 Nov - Budget: 3 questions for the bond market
Note: This is marketing material. This article is not investment advice, capital is at risk.
Don't forget to sign up to our post-Budget webinar where we'll be running through all the important changes, and what it means for your money and investments.
It's probably the most consequential Budget in a generation. It's make or break for the Chancellor and the embattled Starmer premiership. The litmus test for its success is the bond market reaction. I see three key questions that will need answering.
1) to what extent are tax hikes going to drag on growth, which is antithetical to a self-declared pro-growth chancellor, which diminishes her ability to hit fiscal rules?
2) to what extent are tax hikes inflationary, which deepens cost of living problems and restricts manoeuvrability of Bank of England to cut rates?
3) to what degree are forecasts plausible - are they hinged on fiscal restraint in 29/30 that will depend on nebulous welfare reform and spending cuts, the kind of which the govt has signally failed to pass so far?
Gilt yields are tracking a bit higher this morning but have come down in the last few sessions, with the 10yr at 4.51% from above 4.6% at the end of last week.
Sterling caught some bid yesterday, hitting one-week highs against the dollar and euro. USD had been offered on some softer US data as retail sales growth slowed and consumer confidence fell to its lowest since April, nudging up expectations for a December rate cut by the Federal Reserve.
The FTSE 100 is trading up a touch at 9,622 in early trading as European equity markets are broadly risk-on following another rally on Wall Street. The Dow added more than 660 pts to rise for a third day, up 1.43%, while the broader S&P 500 climbed 0.91% to close above its 50-day moving average. Alphabet climbed some more and Meta rose almost 4% after the pair are looking to cozy up on AI. Nvidia, which stands to lose from this deal, fell another 2.6%.
US producer prices rose 0.3%in September 2025, rebounding from a 0.1% drop in August and meeting market expectations. ADP said job cuts accelerated.US retail sales increased by 0.2%in September 2025, the smallest rise in four months and below the 0.4% forecast. I thought the market was too ready to see the Fed cutting but the data is slackening off...
It's Thanksgiving tomorrow.
More Budget stuff...
1) to what extent are tax hikes going to drag on growth, which is antithetical to a self-declared pro-growth chancellor, which diminishes her ability to hit fiscal rules?
2) to what extent are tax hikes inflationary, which deepens cost of living problems and restricts manoeuvrability of Bank of England to cut rates?
3) to what degree are forecasts plausible - are they hinged on fiscal restraint in 29/30 that will depend on nebulous welfare reform and spending cuts, the kind of which the govt has signally failed to pass so far?
Gilt yields are tracking a bit higher this morning but have come down in the last few sessions, with the 10yr at 4.51% from above 4.6% at the end of last week.
Sterling caught some bid yesterday, hitting one-week highs against the dollar and euro. USD had been offered on some softer US data as retail sales growth slowed and consumer confidence fell to its lowest since April, nudging up expectations for a December rate cut by the Federal Reserve.
The FTSE 100 is trading up a touch at 9,622 in early trading as European equity markets are broadly risk-on following another rally on Wall Street. The Dow added more than 660 pts to rise for a third day, up 1.43%, while the broader S&P 500 climbed 0.91% to close above its 50-day moving average. Alphabet climbed some more and Meta rose almost 4% after the pair are looking to cozy up on AI. Nvidia, which stands to lose from this deal, fell another 2.6%.
US producer prices rose 0.3%in September 2025, rebounding from a 0.1% drop in August and meeting market expectations. ADP said job cuts accelerated.US retail sales increased by 0.2%in September 2025, the smallest rise in four months and below the 0.4% forecast. I thought the market was too ready to see the Fed cutting but the data is slackening off...
It's Thanksgiving tomorrow.
More Budget stuff...
There were some pre-Budget moves yesterday. Remember expectations are in the floor, and inflation has in all likelihood peaked -gilts could rally if the market parses the excel sheet and gives it a thumbs up...the devil may be in the detail.
Pre-announcements
Pre-announcements
Minimum wage up
Tourist tax on overnight stays
Milkshake tax with sugar levy extended
Stamp duty holiday for new listings on the London Stock Exchange (good news)
What’s going up
What’s going up
Taxes on income and wealth, spending on welfare, fiscal drag, taxes on bookmakers.
What’s going down
What’s going down
Growth and productivity – OBR expected to slash growth forecast from 1.9% in 2026 to perhaps around 1%, more in line with City and Bank of England forecasts.
The Chancellor may get the jump on a Conservative pledge to scrap stamp duty, replacing it with a tax on sellers. This move could be a considerable boost to the housing market and to housebuilders.
The Chancellor may get the jump on a Conservative pledge to scrap stamp duty, replacing it with a tax on sellers. This move could be a considerable boost to the housing market and to housebuilders.
Anyway, enough of the speculation...
Don't forget to sign up to our post-Budget webinar where we'll be running through all the important changes, and what it means for your money and investments.