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David Milliken @davidmilliken.bsky.social · 19h

The BBC delays some of its podcasts from releasing on other platforms by a few weeks so forces use for anything topical. (And blocks access from abroad and via VPN - a pain if travelling)

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David Milliken @davidmilliken.bsky.social · 20h

Another heavy selloff in bond markets today as oil jumps $5 a barrel. Ten-year gilt yields are now their highest since 2007 (and government borrowing costs are effectively the highest since 1998, as no 10-year borrowing took place when yields were last this high).

Chart of daily 10-year gilt yields from 1985 to October 8, 2026

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Reposted by David Milliken

Andy Bruce (Reuters) @bruceandy.bsky.social · 06/10/2026

Morgan Stanley says it’s shorting the pound ahead of the Budget • sees £8b of headroom now • thinks Healey will go for £15b • sees small delay to fiscal consolidation • mild downside risk to gilts • not much change to cash req this year but a bit higher in future years

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Andy Bruce (Reuters) @bruceandy.bsky.social · 01/10/2026

BoE's Mann criticises mon. policy response to the Iran war. She disagrees with the idea that tighter UK fin. conditions are curbing inflation: no comfort as those conditions include higher inflation risk premium and uncertainty over BoE reaction function www.bankofengland.co.uk/speech/2026/...

bankofengland.co.uk

Financial conditions: what’s priced in? − speech by Catherine L. Mann

Given at the Nomura London Macro Forum

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Andy Bruce (Reuters) @bruceandy.bsky.social · 30/09/2026

🥳 UK economy grew more than thought in the second quarter. • GDP +0.5% qq versus a previous estimate of +0.4% (same with GDP per head) • Strong business investment growth (see 👇) • Current account balance (exc. precious metals) smallest in 5 years at 1% of GDP thanks to services exports

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David Milliken @davidmilliken.bsky.social · 29/09/2026

Britain sold £4.25 billion of 10-year government bonds this morning at an average yield of 5.383% – the highest borrowing cost for newly issued 10-year debt since 1999. Yields were higher in the secondary market in 2007, but no 10-year bonds were actually issued then so the cost wasn't locked in.

Table of results from the UK Debt Management Office's 29/09/2026 auction of £4.25 billion of the 4.875% 2036 gilt

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David Milliken @davidmilliken.bsky.social · 28/09/2026

For connoisseurs of UK labour data, the ONS has now produced a reworking of LFS data using PAYE numbers to better adjust for the post-pandemic drop in responses. Key chart is here, showing a bigger fall in employment at the start of pandemic, stronger recovery after and more decline recently.

Estimated rate of employment among people aged 16 to 64 years, before and after recalibration of Labour Force Survey (LFS) weights to Pay As You Earn (PAYE) employee totals, Quarter 1 (Jan to Mar) 2019 to Quarter 4 (Oct to Dec) 2025, Great Britain
Source: Labour Force Survey from the Office for National Statistics, Pay As You Earn Real Time Information from HM Revenue and Customs

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David Milliken @davidmilliken.bsky.social · 26/09/2026

On 3, I’d forgotten that the Sopranos and West Wing first broadcast in the US in 1999 (and that excludes the whole series per the NYT rules)

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David Milliken @davidmilliken.bsky.social · 17/09/2026

Nothing new about repos today but theory is that any reserves shortfall will be filled via the short-term repo or indexed long-term repo.

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David Milliken @davidmilliken.bsky.social · 17/09/2026

The £20 billion pace of outright gilt sales in October 2026 - September 2027 is similar to what we got in Oct 2025 - Sept 2026. But it will all be backloaded to April-Sept 2027. (And, subject to Treasury approval etc, is likely to be done via sales "at market price" to the DMO rather than auctions)

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David Milliken @davidmilliken.bsky.social · 17/09/2026

The total QT planned for 2026/27 is in line with what investors told the BoE they expected in its July Market Participants' survey. But the QT in future years is more than what was expected. The halt in long-dated sales and temporary pause to all is what people have honed in on today...

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David Milliken @davidmilliken.bsky.social · 17/09/2026

A couple of days ago the Telegraph had a story (unsourced, but largely accurate) that the BoE would halt long-dated gilt sales and switch from auctions to sales via the DMO. The 6 month pause in all sales + plan for £20 bln a year of medium-dated sales thru 2034 was a surprise.

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David Milliken @davidmilliken.bsky.social · 17/09/2026

Busy day at the Bank of England for @bruceandy.bsky.social and me. Three big takeaways: 1/ BoE sees inflation exceeding 4% early next year (in July it saw a 3.2% peak) 2/ Bailey says rate hike now "more likely" 3/ revamp of QT, including 6-month pause on gilt sales and end to 30-year gilt sales

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David Milliken @davidmilliken.bsky.social · 11/09/2026

It’s not great! I’ve asked the BoE if they have a view on which set of results is more accurate… concretely it makes it harder to talk about trends in the data as lots of economists will do some kind of adjustment to the numbers.

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David Milliken @davidmilliken.bsky.social · 11/09/2026

One way for the Bank of England to tackle high UK public inflation expectations: replace the survey company with one that reports lower ones! Still getting to the bottom of what's gone on here....

News release
Following a competitive re-tendering process, Savanta became the provider of the Inflation Attitudes Survey from August 2026. To assess the impact of this change, a parallel run of the survey was conducted by both Ipsos and Savanta in May. In the parallel run, inflation perceptions were the same in both the Ipsos and the Savanta surveys, at 5.0%. However, inflation expectations at all of the 1yr, 2yr and 5yr ahead horizons were lower in the Savanta survey. Median one-year, two-year and five-year ahead expectations were 3.6%, 3.1% and 3.3% respectively in the Savanta survey, compared with 4.0%, 3.5% and 3.9% respectively in the Ipsos survey. Comparisons of changes inflation expectations between the headline May results (Ipsos) and the headline August results (Savanta) should therefore be treated with caution, as in part they reflect changes in the provider as well as like-for-like changes in expectations.

This news release describes the results of the Bank of England’s latest quarterly survey of public attitudes to inflation.

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David Milliken @davidmilliken.bsky.social · 11/09/2026

For those interest in the AI angle, this is how the ONS put it. (They can't name individual companies but it was clear from speaking to them that the the "computer programming" growth was coming from firms where AI plays a major role.)

Commenting on today’s GDP figures for the three months to July, ONS Director of Economic Statistics Liz McKeown said:

“Growth remained relatively robust in the latest three months, as ongoing strength in the services sector was only partially offset by falls in both production and construction.

“Within services, computer programming was the largest contributor, continuing the strong growth seen throughout the year, with evidence that businesses involved with AI and related technologies helped to boost this sector.

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David Milliken @davidmilliken.bsky.social · 11/09/2026

Much stronger than expected July UK GDP data this morning, taking the annual growth rate up to its fastest since February 2025. Question is to what extent this is an extension of first-half seasonal issues / World Cup boost or something more lasting. ONS says growth appears partly linked to AI.

Reuters/LSEG table showing July 2026 GDP data and its components (orange), along with analyst median forecasts (blue) and prior data (white). Arrows indicate data that exceeded the top-most analyst forecast.

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Andy Bruce (Reuters) @bruceandy.bsky.social · 10/09/2026

Gilt yields griding a bit higher again after yesterday's sell-off. 10-year yield now highest since August 2007. Short-dated yields at new three-year highs.

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David Milliken @davidmilliken.bsky.social · 08/09/2026

Britain sold £4.25 billion of 30-year bonds today which will pay an interest rate of more than 5.8%, the highest since 1998. (Long-dated debt like this makes up <10% of UK issuance, but more normal 10-year debt isn't much cheaper for the gov't with a yield of ~5.1%) www.reuters.com/business/uk-...

reuters.com

UK sells 30-year debt at record yield, showing pressure on public finances

Britain sold £4.25 billion ($5.75 billion) of 30-year bonds on Tuesday with the highest yield since comparable records began in 1998, as rising global borrowing costs cast ‌a shadow over new finance ...

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David Milliken @davidmilliken.bsky.social · 03/09/2026

Rising bond yields latest: the UK has just issued £900 million of inflation-linked debt maturing in 2049 with a real yield* of 2.496%, the highest since 2001 * the real yield is are the yield index-linked gilts pay on top of inflation

Table of results from the UK Debt Management Office's September 3 auction of the 1.875% 2049 index-linked gilt

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Andy Bruce (Reuters) @bruceandy.bsky.social · 20/08/2026

CBI's gauge of manufacturing orders just rose to its highest level since November 2024. While still at a pretty low level in the scheme of things, it rose by 20 points in August - one of the biggest jumps since records began in the 1970s.

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Andy Bruce (Reuters) @bruceandy.bsky.social · 14/08/2026

Stunning @reuters.com gallery of the eclipse taken from different countries. (👇 Toby Melville at Glastonbury Tor) www.reuters.com/pictures/alo...

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David Milliken @davidmilliken.bsky.social · 30/07/2026

“Please do not leave this room thinking that the Bank of England is edging towards a hike” - Governor Andrew Bailey pushes back against rate hike bets after balance shifts on MPC www.reuters.com/world/europe...

reuters.com

Bank of England policymakers keep rates on hold but more back hike

The Bank of England kept interest rates on hold as expected on Thursday, but a third policymaker backed a rate hike due to renewed conflict between the United States and Iran.

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David Milliken @davidmilliken.bsky.social · 30/07/2026

End of term at the Bank of England: the last rate decision and press conference by Andrew Bailey before the summer break Economists see a repeat of June’s 7-2 vote to keep rates on hold as U.S.-Iran conflict drags on www.reuters.com/business/ban...

reuters.com

Bank of England to keep rates steady while oil prices gyrate

The Bank of England looks set to keep interest rates steady on Thursday as it weighs the impact of the on-again, off-again Iran war that has ‌closed the Strait of Hormuz for the past five months and ...

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David Milliken @davidmilliken.bsky.social · 15/07/2026

Treasury committee pre appointment hearing

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David Milliken @davidmilliken.bsky.social · 13/05/2026

This is probably the key bit. (She's giving the speech at the LSE in an hour if anyone nearby wants to hear it first hand!)

The international dimension adds to the already complex environment. If a tighter policy stance were pursued – particularly in the current environment where the old exposure of energy prices adds to inflationary pressure – the higher yields could support demand for
UK assets abroad, but also imply a worsening of the primary income balance. Given fragilities and economic uncertainties in the domestic and global financial markets, investor sentiment can shift abruptly. A tighter monetary policy stance could trigger volatility as the new actors unwind positions, potentially leading to tighter domestic financial conditions than intended.

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Reposted by David Milliken

Andy Bruce (Reuters) @bruceandy.bsky.social · 13/05/2026

Interesting speech from BoE's Catherine Mann. She sees risk that rate hikes could spark more volatility in gilts because of the shift in ownership towards hedge funds, overseas investors. That risks tightening fin. conditions by more than BoE intends www.bankofengland.co.uk/speech/2026/...

bankofengland.co.uk

Old exposures, new actors: implications for monetary policy of the UK’s external imbalances − speech by Catherine L. Mann

Given at the London School of Economics and Political Science

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David Milliken @davidmilliken.bsky.social · 13/05/2026

Gilt market not thrilled at the prospect of Wes Streeting quitting (according to latest Times report) Gilt futures dropped about 25-30 ticks on the news (≈ a 0.03 percentage point rise in yields), erasing earlier gains from when some of the heat appeared to be coming off Starmer.

Chart of today's gilt futures (13/05/2026) showing a fall in prices and spike in trading volumes after a Times report that Wes Streeting is preparing to resign)

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David Milliken @davidmilliken.bsky.social · 12/05/2026

Arguably this is unfair: UK debt is the 2nd-lowest in the G7 after Germany, and IMF forecasts last month predicted more deficit reduction in the UK than elsewhere. But it's also a reflection of not having the world's main reserve currency (US) or strong domestic investor demand (JP/EZ)

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David Milliken @davidmilliken.bsky.social · 12/05/2026

UK 10-year borrowing costs have the unenviable combination of being both the highest in the G7 (and pretty much every other advanced economy) and having the biggest rise in the year to date. Not just political risk, also - inflation - less liquid than peers - more reliant on foreign investors

Arrow chart showing the year-to-date increase in 10-year bond yields for G7 countries, including a 64 basis point rise for 10-year gilt yields since 31 December 2025.

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David Milliken @davidmilliken.bsky.social · 12/05/2026

Ten-year gilt yields are finishing the day at their highest since 2008 at just over 5.1% (and 30 years - where the UK no longer issues much debt - topped 5.8%, their highest since 1998, earlier today). A nice chart from my colleague Dhara Ranasinghe illustrating the climb...

Line chart showing UK 10-year government bond yields over the past 10 years, from the Brexit referendum, through COVID, the 2022 mini-budget crisis and more recent climb due to the Iran war and increased political risks.

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David Milliken @davidmilliken.bsky.social · 11/05/2026

There was a similar argument behind issuance of index-linked gilts (lowering yields through signalling anti-inflation commitment). It might have worked at the start (some v low real rates) but creates a vulnerability if there is an inflation shock / currency slide for reasons you can't control.

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David Milliken @davidmilliken.bsky.social · 11/05/2026

"There is no reason why our [€-denominated] paper ... should command a higher rate than that issued by the French or Italians" is especially odd. - UK doesn't raise tax revenue in euros - ECB wouldn't backstop UK debt - BoE can "print" £ but not € in extremis

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David Milliken @davidmilliken.bsky.social · 05/05/2026

Would this rule effectively mean only doing QT when you have a flat or negative-sloping yield curve? And any rough idea on the cost of active QT vs hold to maturity on whatever you see as a likelier yield path? The £60 bln difference between the equilibrium and market paths in the BoE scenarios?

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David Milliken @davidmilliken.bsky.social · 05/05/2026

Here's a bit more detail from the BoE report - essentially claiming the net present value cost is virtually the same whether you do QT at £32 billion a year or £70 billion a year, but the interest rate risk is greater with the former (i.e. there's a wider range of potential outcomes, good and bad).

Bank of England chart showing the path of APF cash flows under different scenarios described below:

In line with previous APF Quarterly Reports, net present value (NPV) figures have also been provided to allow for meaningful comparison between scenarios where cash flows occur at different points in time. In Scenarios 1A and 2A, the NPV from cash flows is approximately -£125 billion. In Scenarios 1B and 2B, the NPV from cash flows is approximately -£60 billion.

These figures demonstrate that different unwind paces do not necessarily alter lifetime cash flows, on a NPV basis, and that the path of interest rates has a more important influence on them. It is, however, true that holding onto bonds for a longer period increases the interest rate risk, in terms of the range of possible outcomes for lifetime APF cash flows. A relatively faster pace of QT therefore has the benefit of reducing the interest rate risk borne by the public sector.

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David Milliken @davidmilliken.bsky.social · 05/05/2026

I'd welcome any views on whether the BoE is right on these calculations! (There's also the separate issue that the BoE argues QE lowered government borrowing costs, boosted growth etc so the cash loss on QE is only one side of the balance sheet - but those estimates seem more speculative.)

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David Milliken @davidmilliken.bsky.social · 05/05/2026

The BoE raised its estimate of the net loss it makes from QE/QT today to £125 billion from £115 bln 3 months ago. That's a lot of money - and reflects the unexpected jump in yields in 2022-26 - but should be spread over years. And the BoE thinks the cost would be similar if gilts held to maturity.

These estimates suggest that net lifetime cash flows could be -£125 billion if interest rates evolve in line with market expectations, or -£60 billion if they fall over time to an estimate of the neutral rate. While these scenarios assume a constant £32 billion pace of annual sales, different unwind paces do not significantly alter lifetime cash flows on a discounted basis.

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David Milliken @davidmilliken.bsky.social · 05/05/2026

Andrew Bailey was setting out the argument for their current approach in a regular letter to Rachel Reeves today... I think *not necessarily change* is doing some work here (but I'm not sure how much less the losses would be if we hold to maturity and remunerate reserves at 4% for the next 20 yrs)

The Bank’s approach to unwinding the APF
In September 2025 the MPC voted to reduce the APF’s stock of gilts by £70 billion over the 12
month period from October 2025 to September 2026, comprising both sales and maturities.2
In line with this decision, the Bank has proceeded with the sale of the APF’s stock of gilts.
Since October 2025, these sales, in addition to the maturity of gilts held by the APF, have led to
a reduction in the stock of gilts held for monetary policy purposes of £33.2 billion as of 29 April
2026. The appropriate pace of gilt stock reduction continues to be guided by a set of key
principles. First, the MPC intends to use Bank Rate as its active policy tool when adjusting the
stance of monetary policy. Second, sales are to be conducted so as not to disrupt the
functioning of financial markets, and only in appropriate market conditions. Third, to help
achieve that, sales will be conducted in a gradual and predictable manner over a period of time.
Whilst different unwind strategies might affect the timing of cash flows between HMT and the
APF, they will not necessarily change the lifetime amount accumulated in the APF. For
example, active sales incur upfront costs, but they also reduce lifetime net interest costs from
carrying gilts on the APF’s portfolio when Bank Rate is higher than coupon payments.
The Bank will continue to monitor the impact of APF unwind on market conditions.
The Bank’s operations, as carried out by the Bank Executive, should maximise value for money
by minimising cost and risk over the lifetime of the APF, subject to achieving the MPC’s chosen
unwind target and in line with the MPC’s key principles. That is achieved, amongst other things,
through:
• The use of auction mechanisms that are carefully designed to maximise demand and
competition.
• Close liaison with the Debt Management Office (DMO).
• The application of comprehensive risk management techniques.

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David Milliken @davidmilliken.bsky.social · 28/04/2026

Train wifi is usually pretty pointless isn't it? It's the same 4G/5G connection that you'd have on your phone (but often with more of a speed / data cap). Some carriages might have particularly poor reception vs an aerial on the train roof, but that's a bit of an edge case...

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David Milliken @davidmilliken.bsky.social · 27/04/2026

77% of stores said sales were down vs April 2025, compared to 9% who reported an increase. Checking back, April 2025 ONS data showed an unexpectedly big rise as sunny weather boosted BBQ and summer clothing sales... Even so, it feels a bit off.

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