What began as a market honeymoon with Labour's first Budget in over a decade quickly devolved into a sobering fiscal hangover, with traders rushing to reprice gilt yields as the realities of yesterday’s budget come firmly into focus. There were elements of the budget that felt tamed, at least in comparison to the alarmist policy speculation in the run-up. However, there is no escaping the significant new borrowing on the horizon as Chancellor Reeves’ fiscal sleight of hand begins to receive an economic reality check.

This is further compounded by the backdrop of tepid growth, illustrated by the OBR’s long-term forecasts, raising real concerns about the suitability of additional borrowing when economic uncertainty reigns supreme. Additionally, the pound finds itself at a crossroads, with the prospect of looser fiscal policy coupled with potentially tighter monetary policy supporting sterling, however, the increased gilt supply and associated risk premium will act as a headwind.