Hello and welcome. You are listening to Patrick Boyle on Finance, a podcast exploring ideas from quantitative finance, examining events occurring in markets right now and financial history to see what lessons can be taken away, including interviews with some of the most interesting people in the world of finance. To learn more about the podcast, visit onfinance.org.

This has been an unusual week in markets, especially in the UK, and it's only Wednesday.

It's been a long time since we've seen such

wild moves in the currency and bond markets of a developed country, let alone a warning from

the IMF who say that they're closely monitoring recent economic developments in the UK.

UK banks have been scrambling to pull mortgage products over the last few days,

and today the Bank of England had to step in to prop up the bond market as pension funds faced urgent demands for cash.

So let's go over why the Bank of England had to step in, what's going on with pensions, and

what the developments in the UK mortgage market might mean for homeowners.

Okay, the rising bond yields and weak currency that we've seen over the last few days mostly

reflects a lack of faith in UK Chancellor Quasi Quartang's plan to fund large tax cuts

and untargeted energy subsidies through the issuance of debt, backed by a promise of future

growth. The IMF said that they understand that the package is meant to boost growth, but warned

that the stimulus package is likely to increase inflation, which the UK central bank is trying

to fight.

And that really is the essence of the problem.

The UK Treasury is pursuing a strategy that opposes what the Bank of England is trying to do.

And the whole thing just looks disorganized and chaotic.

And that's kind of because it is.

While it might be over the top to compare the situation in the UK to Turkey or Italy,

the fact that these comparisons are being made at all should be quite a concern

within the UK government.

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