below is an edited transcript of coverage of markets dealing with surging bets for bank of england rate hikes on thursday july 7 the posts originally appeared on the markets today live blog 0728 more uk homes falling in value as rates feed through more than a third of homes in the uk have declined in value in the past six months a report from property listings portal zoopla said losing an average of £7700 that is an increase in the 18 of homes that zoopla said lost value in the 12 months to may suggesting that impact of higher interest rates feeding through to the mortgage market is having an impact the data indicates that the biggest hit is coming at the pricier end of the market which is then creating a regional divide nearly half of homes in northern england wales and the midlands saw their values increase in the sixmonth period with much fewer seeing the same in more expensive areas like the south east of england and london there’s also a hint of good news though uk companies are reporting signs of easing price pressures in spite of the jump in interest rates in order to tackle stubbornly high inflation fewer than half of the uk firms surveyed by the british chambers of commerce anticipate raising their prices in the next three months a decline on the proportion in the first quarter and the first time the total has been under the 50 mark since 2021 companies said the main inflationary pressure they now face is on wages rather than on energy or raw material costs shevaun haviland directorgeneral of the bcc said a “fine balancing act” will have to be struck by the boe it’s a very negative open for uk assets the yield on 10year gilts has risen past 45 for the first time since october in the aftermath of the trussera market turmoil gilts of other durations are also seeing increases the ftse 100 and ftse 250 are both down significantly with banks miners energy companies and consumer staples all seeing declines hot off the heels of a surging gilt yields come bets on the bank of england interest rate traders now see that peaking at 65 which would be the highest in 25 years that’s also not far off from the 7 level that jpmorgan economists warned could be possible and could send the uk economy into a deeperthanexpected slowdown 0858 boe governor bailey also took aim at some petrol stations for overcharging in a cbbc interview this morning remember the competition and markets authority has raised questions about whether supermarket forecourts are ripping off customers by charging an extra 6 pence a liter or fuel last year the government is backing a new “pump watch” price comparison site to enable drivers to access live station by station fuel prices on mobile devices to boost competition the prospect of everhigher interest rates is taking its toll on the uk stock market with the ftse 100 sliding more than 1 to hit the lowest level since march the more domesticallyfocused ftse 250 is faring just as badly with all sectors sliding investors are fretting over the adverse impact that higher borrowing costs will have mainly on the consumer and housing firms which are leading declines on the index today 0931 another stock broker in the form of peel hunt offers a new somewhat dour reflection on the state of uk capital markets peel hunt said the macroeconomic backdrop in the past couple of weeks “has continued to be challenging” and added that investor sentiment is “low” that’s in line with a downbeat assessment yesterday from boutique investment bank numis however one silver lining for peel hunt is that its overall performance is in line with what it expected having won spots advising on a number of ma deals 0946 in the search for silver linings amidst britain’s economic malaise there’s a temptation to clutch at straws data or trends that flirt with optimism but that upon closer inspection reveal themselves as hollow the venture capital industry’s sustained enthusiasm for uk tech is not though one of those hopefired hallucinations that’s the view of staffan helgesson general partner at creandum venture capital who’s backed companies like spotify and klarna the uk he tells us remains a decent place to invest despite the headwinds of brexit helgesson points to the concentration of talent here and the capital markets but dear reader of an optimistic bent there’s a catch klarna which is based in sweden but has a sizeable footprint in the uk is unlikely to pick london as its ipo destination helgesson tells us on bloomberg tv’s markets today show “if i were to bet i think they’d go for stockholm” he said 0957 as the market starts to price in boe rates hitting 65 charlotte ryland the head of investments at ccla investment management told bloomberg tv’s markets today show earlier that “quite a lot” has now been priced in for uk gilt markets and with yields on 10year gilts now comfortably higher than those of italy and greece some value is emerging in the market 1006 here’s more good news on inflation that might take some of the heat out of those boe bets the central bank’s decision maker panel survey often cited as a key part of policy discussions today showed uk companies are expecting to increase prices at their slowest pace in 16 months expected out price growth in the next 12 months dropped to 49 in june from 51 in may the weakest pace anticipated since february last year when russia invaded ukraine and sent energy prices soaring expectations for headline inflation in a year’s time slid to 57 from 59 the survey showed uk stocks face unrelenting pain today as a result of the latest surge in boe rate bets at one stage the ftse 250 extended its slide to 15 if it ends the day there that would be its biggest loss since midmarch as we noted earlier declines in the midcap index are very much driven by concerns over the uk economy and its ability or lack thereof to withstand higher borrowing costs in discussing the risk of a 7 boe rate jpmorgan also warned of the cost to growth should policymakers decide they need to go to extremes to curb inflation as economist allan monks wrote 1044 a chunk of that ftse 250 weakness is being driven by homebuilders and building products suppliers as investors fear that everhigher uk rates being priced in by the market augur more pain in the housing sector ccla’s ryland also mentioned on the markets today show earlier than she would “expect some weakness” to start to flow through in the uk economy soon following the hikes by the boe housing is likely to be hard hit zoopla’s report this morning showing a higher proportion of homes seeing their values decline is likely only the start of the pain as present most of the declines are in areas where prices saw a more pronounced overheating like the south east of england and london as fixedrate mortgages roll over and the higher rates feed through into the market which has only started to happen in recent weeks that will ripple out into other regions which have so far remained resilient 1101 the rampup in rate bets is also crimping the appeal of dividends from uk stocks british equities have been known for generous dividends but that advantage has been eroded as surging gilt yields reflect expectations for higher rates the ftse 100’s dividend yield recently fell below the uk 10year yield which climbed above 45 today for the first time since the october gilt crisis that means gilts are now yielding more than equities for the first time in more than a decade 1118 could the boe raise rates further beyond 65 bloomberg’s nour al ali and guy johnson discuss the potential risks that it could create for the economy 1132 while all the talk today is about rates hitting 65 uk firms are also delivering a clear warning they think the boe has lost control of inflation the boe’s dmp survey which we mentioned earlier shows companies are expecting inflation to be running at almost double the 2 target three years from now that would be a bit of disaster for officials especially after such an aggressive hiking cycle 1221 hiking interest rates has often been described by central banks including the boe as a blunt tool but it’s hammering economies into recession that’s according to bloomberg opinion’s marcus ashworth who argues that policymakers’ actions are impacting wealthy households relatively minimally while having a disproportionate effect on those who can least afford it overleveraged commercial property companies and utilities firms aside marcus notes that “the real damage is being done in other pockets of the economy such as small and mediumsized enterprises and home renters” in the uk he observes that the boe seems determined to engineer a rise in unemployment in its pursuit of its “precious” 2 inflation target something that risks further magnifying societal inequalities the uk housing sector just can’t catch a break today britain’s construction industry unexpectedly shrank in june according to a sentiment measure by sp global the decline was due largely to a pullback in residential building work which dropped at a pace last seen during the pandemic and the global financial crisis 14 years ago bloomberg’s jill namatsi reports that bodes ill for the alreadypaltry supply of homes in the uk which has been a factor that has held back new buyers from entering the market the ftse 100 remains in the doldrums still sitting at the lowest since march and falling the most since latemay only two stocks are currently in the green on the bluechip index at the time of writing and they are united utilities and severn trent both water suppliers they’ve been hit by thames waterrelated jitters recently but on a day when investors are retreating into safe bets utilities are benefitting the ftse 250 is also still sliding the pound is slightly off today’s highs and gilt yields are wider across the board with the sharpest moves among the longer maturities and there we have it 10year gilt yields have risen to the highest level since 2008 as mentioned yields are up across maturities mirroring the moves across government bond markets in europe and the us the latest leg up was sparked by the adp jobs report in the us which has underscored the strength of the american economy ahead of the key payrolls report on friday 1353 investors now fully pricing in 50point boe hike in august traders have followed up today’s big jump in gilt yields by fully pricing in another hike of 50 basis points by the bank of england in august leaving us to sit and await what the next milestone may be today 1359 stocks are sliding even further as the market continues to price in more rate hikes the ftse 100 has hit another low for today’s session while the ftse 250 is now down by the most since march consumerfacing stocks homebuilders property developers and miners are all dragging across the two indexes 1402 the remarkable thing about this move in yields and boe bets is that it is really coming in the absence of new uk developments there’s been some strong jobs data in the us today that looks to have sparked the latest leg but generally the uk picture hasn’t changed that makes the jobs or inflation data in coming weeks all the more important if either shows any signs of softening things might turn around pretty violently 1514 multiple gilt yields jump to the highest in 15 years today’s grim surprise is gilt yields surpassing levels seen last year during the market turmoil following former pm liz truss’s disastrous fiscal statement though this time as my colleague dave pointed out earlier it’s happened following no big uk developments but rather thanks to a slow creep of mounting economic gloom about sticky inflation and the effect of higher interest rates today’s spotlight chart shows yields on 2 5 and 10year securities have risen to levels comparable with those seen during the global financial crisis in 2008 as the banking turmoil showed rising yields carry risk not just for government finances but also institutional investors especially in highly leveraged industries like real estate whose investments get gradually devalued that’s another reason we’ve seen property names like persimmon land securities group barratt developments and berkeley group among the biggest losers on the ftse 100 today 1548 it looked earlier like the bond market madness was easing off a bit but the selling is now back with a vengeance as we near the close tenyear yields are now up about 20 basis points up even more than the volatile twoyear rates we’ve been tracking recently bank of england rate bets are also unrelenting traders now see a 50 chance that uk borrowing costs will peak at 675 a level last seen in 1998 this pickup comes despite the fact that it’s a quiet week for data rather it appears to be rates and bond markets feeding off each other and getting caught in a doom loop over the economic toll that ever higher borrowing costs will plunge the economy deeper into slowdown yet we won’t have the latest read on uk growth until the return of hard data next week in the form of employment and manufacturing figures and those reports will be key to determining whether uk rates and gilts remain a oneway betor if traders will soon need to make a painful uturn 1616 it’s a perfect storm of misery for the ftse 100 with only one stock solidly holding onto its gains in the form of water supplier united utilities the bluechip index has been “assailed on all sides today” said chris beauchamp chief market analyst at ig 1628 gilts pound stocks all sink on brutal day for uk assets uk stocks are headed for their worst drop since march amid global declines after markets digested yesterday’s hawkish fed minutes from its june meeting the ftse 100 is set to close at its lowest point since last november with only two stocks seeing gains meanwhile the ftse 250 is on course for levels last seen in october in the aftermath of the trussera crisis gilt yields have climbed steeply with longer dated notes seeing over 15 basis point rises even the pound hasn’t escaped the malaise giving up midday gains to trade just below 127