From Morningstar: 2024-10-03 09:58:00

The UK economy is poised for a dynamic fourth quarter in 2024, with key dates approaching for investors in government bonds. The Bank of England will have crucial meetings before the year’s end, following a recent interest rate cut in August and discussions of further easing. Monetary policy decisions are expected in November and December.

Inflation in the UK has reached the 2% target but has slightly increased to 2.2%. September’s data, due on October 16, will precede the Autumn Budget and a significant Bank of England meeting. While shop price inflation figures show promise of inflation easing, the eurozone faces potential rate cuts due to undershooting inflation targets.

With the upcoming October Budget, UK residents are bracing for potential tax changes. Given discussions on inheritance tax, capital gains tax, and pension rules, savers and investors anticipate a challenging fiscal policy landscape under the new government. There is speculation and concern over the impact of tax hikes on entrepreneurs and taxpayers.

Bond markets will closely monitor the government’s fiscal decisions this quarter to gauge the impact on government bond yields. Memories of past market volatility weigh on investors as they watch for the new government’s moves to avoid economic repercussions. The Bank of England is currently selling off a portion of its government debt to reduce its gilt stock.

As the Bank of England sets interest rates and engages in quantitative tightening by selling off government debt, bond markets face uncertainty. The sale of £2.15 billion of UK government debt in October is part of a larger reduction plan. With current yields above inflation rates, investors are monitoring the bond market closely for investment opportunities in a changing economic landscape.



Read more at Morningstar: Key Q4 Dates for UK Goverment Bond Investors