Borrowing record amounts at a time when the BOE is about to wind down its own stock of gilts is evidently taking a toll. A severely weakened currency, more BOE rate hikes and a current account deficit is all putting immense pressure on the UK outlook right now and it is showing up in the bond market.
This may very well be the sign of a collapse in a market that is not able to accommodate the extra supply amid quantitative tightening. In essence, it is reflecting massive fears and unease over the financial stability in the UK. 2-year gilt yields have shot up by more than 100 bps since Thursday now to 4.50%. You really just have to see it to believe it with this one.
Meanwhile, 10-year gilt yields are also up 70 bps in that same period to 4.20% today:
