Wonderful thanks for your assistance (I'm on ii so found it quite easily)

Much appreciated

Bought some as a DIY offset for my 5 year fix re mortgage.
Don't know what the price is yet but should produce a small profit on the equivalent mortgage amount plus options depending on what the future holds.

Already looks disappointing, it seems the bond vigilantes are making a full on attack.

The 5 year yield is now at 4.57% so looking at an immediate loss in capital value of 0.4%. I now feel foolish for thinking buying at a gov auction was a decent idea.

20 year yield is now at 5.34% which has never been seen this century.

Does anyone know how this bond vigilante stuff should play out ? It begins to feel like a doom loop. The higher they push up gilt rates the more unaffordable the UK debt becomes and the more taxes must be raised. But the more taxes are raised the more the economy will crash and tax revenues will fall. Therefore gilt rates will rise further etc etc. End result the destruction of the UK and the worst recession we have ever seen ?

How do you stop it ?
1/ The resignation of Rachel from customer accounts and two-tier Kier ? A new election followed by massive cuts in public expenditure which will itself produce a huge recession ?
2/ Large UK interest rates cuts with a plunging pound creating massive inflation to try to save the economy ?

Answers on a postcard please.

NMKC, I agree, there is a risk of further capital falls, although if you are holding to maturity that shouldn't be an issue (except psychologically perhaps). UK yields are indeed the highest since 1998 but they can always go higher.

I don't think RR will resign over it. They will find a way to blame the previous government or some global macro drivers that have absolutely nothing to do with the recent budget, and nothing at all like what happened after the Truss budget.

The bond vigilantes will be sated by spending cuts or further tax rises. The government has insisted that there won't be another budget before next Autumn, so it remains to be seen whether sufficient spending adjustments can be made in the interim period, or if things get so bad that they are forced to raise taxes sooner. Either way, more tax rises are likely, and if inflation is on the up (as is feared) then those rising yields will get eaten away.

Perhaps one question is what all of this does to sterling? The pound has fallen slightly of late, and this may continue, so perhaps US treasuries are a better option? Yields are also rising in the US in advance of the new Trump administration, but a lot may already be in the price, and if the $ remains strong relative to sterling, there is some protection there.

Alternatively one might conclude that lending to governments isn't quite as risk free as it seems (depending on duration and how bonds are held).

Nominal GDP growth last year was around 4%. what is the weighted average interest on all debt? I suspect less than that or at most around 4%.

So could still be entirely serviceable. But UK have been able to add debt without much concern (with exception of late 2022). Difficult to say at what point the market starts to price in UK being insolvent, but does not appear so now and possibly we could just grow (and inflate) our way out of it. Inflation seems to be the most probable way to manage our debts.