Your Evening Briefing: UK ‘Moron Premium’ Remains as Truss Departs

Regardless of whether the third time in as many months is the charm, the next UK government faces a landscape of smoking economic ruin that the City and Wall Street would prefer cleaned up sooner rather than later. Many Conservatives are calling for a more stable, businesslike figure than Liz Truss’s self-styled “disruptor-in-chief,” an approach that imploded in historic and indeed global fashion. Still, the prize awaiting the Tory who wins the latest contest for 10 Downing Street isn’t a pleasant one by any stretch. There are growing fears among the faithful about their chances in the next general election, with surveys giving Keir Starmer’s Labour Party a yawning advantage. As for hopes that a steadier hand will guide the next government to calmer financial waters, there’s a sizable storm that’s unlikely to dissipate when Truss leaves: It’s known as the “moron risk premium,” or simply the “moron premium.”

US Treasuries tumbled Friday, driving most benchmark yields to the highest levels since 2007. “The global inflation bogeyman continues to scare the bond markets,” said strategists at Societe Generale. “Central banks have additional big moves to make.”