UK Increase Gilt Issuance / FTSE All Time High / Ash-tronomical Skill
The UK government has announced an increase in its gilt sales for the fiscal year 2024-25, planning to issue an additional GBP12.4bn bonds. This adjustment brings the total projected gilt issuance to over GBP277bn, surpassing the Debt Management Office's initial forecast.
The additional issuance will be skewed toward shorter maturities, after data out this morning showed that the UK government borrowings overshot its forecasts in the last fiscal year. Shorter-term gilts will now make 36.3% of the total issuance, with planned sales increasing by almost GBP5.5bn. Medium-term gilt sales will also increase by nearly GBP4bn.
Also, it has taken its time, however, yesterday the FTSE 100 finally broke through 8,000 again to a new all-time high, taking out the previous high set over a year ago. Of course, the Footsie is dominated by commodity companies and multinationals, meaning that the recent weakness in sterling, especially after Friday’s dire retail sales numbers, improved their earnings outlook.
Sentiment was also helped by reduction in fears related to the Middle East crisis, as well as company earnings being higher than expectations along with better news out of China with should increase demand for commodities. Lower UK inflation is also helping the cause.
Against their international peers, UK stocks are still massive laggards, but that’s a Daily Update for another day.
Finally, whilst on a long-haul flight, when the pilot makes an announcement, the last thing you want him to say is “Ladies and gentlemen, this is your captain speaking. We have a small problem. All four engines have stopped.”
That is exactly what happened in 1982 on a British Airways flight from London to Auckland whilst passing over Indonesia. The pilot finished his announcement with the comforting words “We are doing our damnedest to get them going again. I trust you are not in too much distress.”
Unbeknownst to the captain Eric Moody and his two co-pilots, they had just flown straight into the ash plume of an erupting volcano. The cockpit was filled with a “curious white smoke”, and none of the speed gauges were working properly. Incredibly, the passengers didn’t descend into panic, it was reported.
Moody began a slow descent that left him with about 20 minutes of powerless flight time before the plane would ditch into the Indian Ocean. The crew made more than 20 attempts to restart the engines, to no avail. However, after a 13-minute glide in the 747, one of the engines finally relit, followed by the others.
It was only on their final descent to Jakarta that the crew also realised that the windscreen had been rendered almost totally opaque by the sandblasting effect of the ash. Using a “two-inch strip of visibility” at the edge of the glass, and with the engines still playing up, Moody expertly “guided the airliner to a faultless landing”.
To rapturous applause we are guessing!
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