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Market volatility intensified this week as global central banks acted to maintain financial stability. The Bank of England intervened to avoid a crash in the gilt market following the surge in bond yields triggered by the government’s proposed unfunded tax cuts. The central bank suspended quantitative tightening and instead pledged unlimited purchases of long-dated bonds to restore market functioning and reduce credit contagion risks. Yields fell dramatically across the curve in the US and UK bond markets. This followed the Japanese government’s intervention last week, with purchases of yen in an effort to support the exchange rate while the central bank maintained ultra-low interest rates.

Market volatility intensified this week as global central banks acted to maintain financial stability. The Bank of England intervened to avoid a crash in the gilt market following the surge in bond yields triggered by the government’s proposed unfunded tax cuts. The central bank suspended quantitative tightening and instead pledged unlimited purchases of long-dated bonds to restore market functioning and reduce credit contagion risks. Yields fell dramatically across the curve in the US and UK bond markets. This followed the Japanese government’s intervention last week, with purchases of yen in an effort to support the exchange rate while the central bank maintained ultra-low interest rates.