Interest Rates Fiddle Higher While Hollywood Burns

I thought things like this were supposed to happen after the End Game. Not before. Now I'm confused.

A preliminary note, though I'm writing with a sardonic tone here, I am in reality hoping that everyone in LA gets out safely with minimal property damage except for all the idiots there who deserve it, whoever they are. Perhaps now it's finally time to actually wear a mask for a real understandable reason if you're in LA.

Short of footage of an undead human zombie horde actually eating the brains of their victims, this is the most End Gamey picture conceivable. As far as I know it's not AI nor is it doctored.

Anyway.

UK 10Y Gilt Yields Surpass 2022 LDI Crisis Levels

While Hollywood is burning down or whatever, UK gilt yields have finally decisively broken above their September 2022 LDI crisis levels. LDI stands for Liability Driven Insanity or whatever, which is when the entire UK pension system nearly collapsed overnight in a waterfall of margin calls, which is going to happen anyway and was just postponed for a while. Yields nearly broke through those levels mid 2023 but got shy, and now it looks like they're going to break away this time.

What is key about the rise in 10Y gilt yields though is the fact that it came together with a fast weakening of the pound relative to the dollar. Bloomberg is confused by this because they are Keynesians to the core and Keynesians do not understand basic economics. Specifically, they do not understand that when enough of your currency's market cap is backed by debt denominated in that same currency, then when that same debt loses value, so does the currency. Read Bloomberg's confusion about this basic point here:

The price action on Wednesday [in 10Y gilts], which lacked any clear catalyst, is particularly unsettling for traders because the rise in UK rates was accompanied by a slump in the pound. Typically, higher yields boost the appeal of a currency, so a coordinated move lower suggests that investors are revisiting the broader case for investing in the UK.