But the selling pressure in recent sessions has been spreading to other parts of the world as well. UK markets have been in a tailspin since Chancellor of the Exchequer“Investors fear further selling from UK liability-driven investment managers in response to margin calls, including selling of USD high-grade credit,” JPMorgan Chase & Co strategist Eric Beinstein wrote on Wednesday. “There was some evidence of this selling yesterday.
“What’s happening in the UK could lead to further volatility also in the Eurozone market,” said Gallo, whofor Algebris Investments. “There’s a lot of assets that should not be priced where they are now. We’re just at the beginning.” Kwarteng and the British government are preparing to make BOE chief Andrew Bailey a scapegoat for the turbulence that may hit the UK next week if stricken pension funds at the heart of this month’s selloff have not unwound their positions and raised the cash they need by the end of this week.
Bailey this week underlined his commitment to halting government debt purchases on Friday as planned, both to draw a line under a programme that is complicating his efforts to tame inflation and to encourage pension funds to get on with closing their positions.