MM084: Carnage in UK Bond/FX Markets – What happened, what’s next?
Market Maker
00:00
What Happened This Week With Swap Interest Rates
A lot of these swap interest rates are linked to government bond yields. Bond yield spiked super aggressively this week, the biggest move we've ever seen. The cash liability that needed to be transferred from entity A to entity B within a swap arrangement was way bigger than they had expected and definitely weren't prepared for. This is really where the Bank of England had to get forced in. It was the lender of last resort basically stepped up and go, oh my god, if we don't act, these pension funds could well go bankrupt.
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