Friday Reverses the Bank's Party: Gilts Sell Off, FTSE Drops 1.5%
The morning after the QT euphoria, gravity returned: ten-year gilt yields climbed back to about 5.30% from Thursday’s 5.21%, two-year yields rose ten basis points, and the FTSE 100 fell 1.5% to 10,659 — still up strongly on the week. Strong retail sales plus the week’s three central-bank moves revived the rate-rise trade; Brent eased a third day to around $104 on signs of Saudi supply recovering; American ten-year yields touched 5%.
Thursday and Friday told one truth in two halves: the Bank can remove its own selling from the gilt market, but it cannot remove the war, the data or the global tide — and a US ten-year at 5% is an anchor no domestic technical adjustment out-swims. The velocity of the round trip is itself information: a market that rallies violently on flow relief and sells off on one decent retail print is a market with no settled view of Britain’s inflation path, only positions. That volatility is now the Chancellor’s planning environment — the difference between 5.2% and 5.3% on the ten-year is real money across a Budget. Watch where the ten-year settles next week: the post-QT range, once found, is the Budget’s true constraint.