LONDON - British government bond yields surged by the most in a day in over three decades on Friday, the pound slid to a fresh 37-year trough against the US dollar, and stocks hit two-month lows after British Finance Minister Kwasi Kwarteng laid out a series of tax cuts in a bid to boost growth.
The bond market went into a tailspin, with yields on the five-year gilt - one of the most sensitive to any near-term shift in interest rate or borrowing expectations - up by half a percentage point. This was the biggest one-day rise since at least late 1991, according to Refinitiv data. "Now with spare capacity non-existent, inflation at a 40-year high and the Bank of England trying to cool things down, we are likely to see a policy tug of war reminiscent of the stop-go 1970s. Investors should be prepared for a bumpy ride," he said.
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