Morning Round-Up

UK 2-Year Yield Surpasses 5%

Yesterday, the yield on UK two-year gilts rose above 5%, surpassing 2008 highs. This comes as markets look towards Thursday’s Bank of England policy meeting, where their 13th consecutive rate hike is on the cards. If enacted (which it almost certainly will be) a 0.25% increase would bring their main policy rate to 4.75%. As yields on the UK-two year continued

to climb, the average cost of a two-year fixed-rate mortgage rose past 6%. Meanwhile the average cost of a five-year mortgage climbed 5bps over yesterday’s session to 5.67%. With base rates now forecast to go into the 6% range there is going to be plenty more pain to come and plenty more pressure on the government to offer some kind of support.

IndiGo Reaches Record Deal with Airbus

Yesterday, the Indian low-cost carrier IndiGo struck a record deal with Airbus as the global airline industry turns its focus to the Paris Air Show. The company (founded in 2006) has a fleet size of 308, and yesterday placed an order of 500 planes, with a value of around $50bn. Even before the deal, IndiGo has around 480 planes which are yet to be delivered and it is expected that yesterday’s agreement will see planes delivered between 2030 and 2035. IndiGo is the largest player in the Indian airline industry, but by no means the only one;

earlier this year Air India placed orders with Boeing and Airbus for a total of 470 aircraft, which would bring their fleer to 600. For context, the world’s largest airline, American has just under one thousand planes and operates almost 7,000 flights per day. With India about to overtake China as the world’s most populous nation and with economic growth at 7%, the airline industry has already taken off and now looks to be heading stratospheric.