Former British prime minister Liz TrussShe lasted only 49 days before both she and the policies were dropped. UK budget policy was made consistent with tight monetary policy and UK bond yields dropped back. The UK could blow itself up, but it is not large enough to blow up the world economy.
Bond yields in the US have exploded recently by more than one percentage point as government borrowing rises and the Federal Reserve adds to bond supply by reversing its previous quantitative easing. This reflects the market realisation that short interest rates will need to stay higher for longer to get inflation down.
Is there a middle path where Powell gets inflation down gradually despite conflicting monetary and budget policies, without blowing up the financial market? We should all hope so, but it is no certainty. What happens in the US will have a big impact on the world economy, unlike the UK. If the US has a hard landing so will the rest of us., most nations have had short interest rates above long rates to slow their economies. We have short rates below long rates and less tight monetary policy.