Did George Osborne save the world?
Andy White (kudos for using your real name in a world of anonymous commentators) takes issue with my blog on the invisible bond vigilantes that were appeased by George Osborne’s emergency budget.
White says my chart shows bond investors wavering before the election, after which they ploughed in. Further he says “it is incorrect to say that this [UK falling bond yields] is caused by fears over the Euro. The French and Germans are not likely to run into difficulties and if investors wanted Euro assets they could run there rather than Britain, which has after all had a weakening currency. Or to America where continued stimulus should be increasing growth prospects if the editorial line of the independent is correct.”
I suppose on UK bond yields the point is debatable.
Looks like a downward decline from late February to me, albeit one that accelerated in early May.
But I think White is wrong in his argument about eurozone debt. Investors did pile into German bonds over the same period.
And French bonds:
The ran for the safety of US Treasuries too from April:
Japan’s bonds became more popular aswell over the same period:
Was all that a response to Osborne’s emergency budget?
Take a look at what happened to dodgy Spanish and Greek bonds over the same timeframe.
Investors wanted out.
There was a mass flight to safety in international bond markets beginning in April (and still continuing). And the evidence suggests that Britain was regarded as a safe haven before Osborne’s emergency budget
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