Blain’s Morning Porridge 16th, Sept 2026 “Gilts are dull, boring and predicable, but utterly terrify markets when they move a fraction of basis point.”Global Bond yields remain… fragile. As the US breaches 5% 10-year yields, the UK is now slowing QT which should be market positive. It’s high time the Bank of England and the UK Treasury (which famously pretend the other doesn’t exist) cooperate on liability management to address the UK’s debt pile – which is actually in much better shape than the right-wing press would have you believe.An Apology: Yesterday we had a IOS problem. “Idiot on Seat” – I forgot to switch on the microphone recording the Morning Porridge podcast. I only found out on the train! Key Takeaways:The global bond selloff hit a worrying tidemark yesterday as the US 10-year Treasury hit 5%. Shock, horror… mass panic? Nope – Normalisation.The Bank of England spotted the kerfuffle in bonds – and are doing the right thing by slowing QT.The key issue for bond markets is how QT impacts demand/supply pricing. At current rates QT was about 22% of the size of new UK debt issuance. That’s had a significant negative impact in terms of the higher yields on Gilts.The UK’s debt position isn’t as bad as other nations – its’ longer debt profile means less to refinance each year. Cutting competing supply will ease prices further.Slowing QT will not create a sudden bull market, but will ease the pressure from energy costs, slowing trade, rising inflation, conflict risks and unsustainable government deficits. (It might even shut the Torygraph up for a while…)The UK’s Treasury and The Bank should cooperate to abandon QT completely and embrace liability management of the UK’s debt pile.Zonk Theory – replacing the Bank’s Portfolio with a Zero-Coupon Perpetual “Zonk” could reduce the UK’s outstanding debt, avoid crystalised losses from QT and further lower debt costs…As predicted, US 10-year Treasury yields broke through 5% last night. I am intrigued to see who Scotty Bessent blames it on. Zelensky? The Mekon?Meanwhile, the Bank of England is about to slow its Quantitative Tightening programme.You can read the Morning Porridge by subscribing on ⁠www.morningporridge.com⁠, and have it delivered fresh to your inbox every morning!

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