UK Now Safer Haven than Germany

Over at the “evidence based” LeftFootFoward blog they have an opinion piece claiming “Osborne’s ‘safe haven’ view is delusional”. Let’s examine the evidence, starting with Sovereign Credit Default Swap rates:

Exhibit A

CDS rates reflect the cost of insuring against the risk of default. UK gilts have got their edge back, German government bunds are now seen by international markets as a higher risk than British gilts. So Osborne is right to claim that Britain is seen as a safe haven, with the resultant benefit of lower cost long term borrowing. Guido’s second piece of evidence is the disparity between German and UK government borrowing rates:

Exhibit B

German 5-year borrowing rate: 1.41%

UK 5-year borrowing rate: 1.29%

UK rates are lower, though not as low as that other traditional European safe haven, Switzerland, where interest rates have turned negative. This means that effectively you have to pay the bank to deposit Swiss francs. Below are last night’s closing money market rates for Swiss LIBOR futures, usually quoted as 100 minus the rate, they are now confusingly trading above 100 meaning that money market rates are now negative. Not something Guido has ever seen before…


Elsewhere in Europe the banking system teeters on the edge of disaster. Anecdotally there are tales of Italians driving their Alfa Romeos across the border to convert their paper euros into hard currency in Switzerland. To paraphrase Sarah Palin: How is that monetary unity thing working out for europhiles?




Tip offs: 0709 284 0531
team@Order-order.com

Quote of the Day

Jeremy Corbyn at his leadership launch:

“Labour is stronger.”

Guidogram: Sign up

Subscribe to the most succinct 7 days a week daily email read by thousands of Westminster insiders.

Facebook

MATTHEW ELLIOTT ON WHY LEAVE WON MATTHEW ELLIOTT ON WHY LEAVE WON
OSBORNE GIVEN “SH*T” ROOM WITH NO VIEW OSBORNE GIVEN “SH*T” ROOM WITH NO VIEW
5,000,000 SIGNATURES: FEW POLICY CHANGES 5,000,000 SIGNATURES: FEW POLICY CHANGES
CORBYNISTAS USED CODE TO HIDE CASH-FOR-VOTES PLOT CORBYNISTAS USED CODE TO HIDE CASH-FOR-VOTES PLOT
First Lady Michelle Obama Carpool Karaoke First Lady Michelle Obama Carpool Karaoke
PMQ’s Sketch PMQ’s Sketch
How to Reach Westminster Politicians How to Reach Westminster Politicians
OWEN SMITH’S 999 EMERGENCY OWEN SMITH’S 999 EMERGENCY
MELANIA BORROWS FROM MICHELLE MELANIA BORROWS FROM MICHELLE
MAY: I WOULD PRESS NUCLEAR BUTTON MAY: I WOULD PRESS NUCLEAR BUTTON
New Uber Rival Tries to Get Unions Onside New Uber Rival Tries to Get Unions Onside
SMITH’S £200 BILION “NEW DEAL” PLEDGE BUSTED BY MCDONNELL SMITH’S £200 BILION “NEW DEAL” PLEDGE BUSTED BY MCDONNELL
CONGRATULATIONS MR AND MRS UMUNNA CONGRATULATIONS MR AND MRS UMUNNA
UKIP SEEKING TO TAKE ADVANTAGE OF “OILY” SMITH UKIP SEEKING TO TAKE ADVANTAGE OF “OILY” SMITH
FALLON WELCHES ON £1,000 PIERS MORGAN BET FALLON WELCHES ON £1,000 PIERS MORGAN BET
OWEN SMITH: IT WOULD BE “TEMPTING” TO BLOCK BREXIT OWEN SMITH: IT WOULD BE “TEMPTING” TO BLOCK BREXIT
NEW JUNIOR MINISTER APPOINTMENTS NEW JUNIOR MINISTER APPOINTMENTS
Social Media’s Filter Bubble Driving Political Anger Social Media’s Filter Bubble Driving Political Anger
Sun Names Elton John Sun Names Elton John
LABOUR MPS MAKE COMPLETE ANKARAS OF THEMSELVES LABOUR MPS MAKE COMPLETE ANKARAS OF THEMSELVES