The financial market itself has the harshest verdict on the policies of the new Liz Truss.
Paul Donovan, the chief economist at UBS Global Wealth Management, made the harshest comments.
Advanced economy bond yields are not supposed to soar the way that UK gilt yields rose, he told clients. Modern politics produces more extreme political parties than the voter or investor consensus, and this reminds investors. The UK Conservative Party is seen by investors as a doomsday cult. Donovan s verdict is that the tax-cut plan offered by new Chancellor Kwasi Kwarteng could cause a short-term sugar high but wouldn't generate a meaningful medium-term boost. He said that a rational response to the tax cuts would be to save them, in anticipation that a future government would reverse the cuts.
Donovan was suspended by the Swiss bank after comments about the swine flu that caused offense in China. He apologized for his comments.
Kwarteng told the BBC on Sunday that he wanted even more tax cuts than the 45 billion announced on Friday.
The yield on the 2 year gilt TMBMKGB 02 Y increased by as much as 66 basis points, on top of Friday's 41 basis point increase, on expectations that the Bank of England will respond to the tax cuts with steeper interest-rate hikes.
The pound, or GBPUSD, was incredibly volatile, trading as low as $1.0349 in Asian hours, all the way up to $1.0916. The Bank of England was expected to make a statement, though there was no comment from the U.K. on Monday afternoon.