Hedge fund giant Balyasny Asset Management believes the Bank of England (BoE) could be fighting a losing battle to bring down inflation following its intervention to control bond yields last week, according to a report by Bloomberg.
The BoE’s intervention to prevent a potential crash in the gilt market came in the form of a pledge to make unlimited purchases of long-dated bonds. And while it has stabilised markets to some extent, the $16.6 billion multi-strategy manager, whose main hedge fund is up about about 7.8% this year, believes the value of sterling is still at risk.
The report cites an investor letter as revealing that it sees the “tradeoff” from the BoE’s attempt to control gilt market rates following Chancellor Kwasi Kwateng’s announcement of a raft of unfunded tax cuts, is “giving up control of both inflation and the currency (sterling)”.
Balyasny’s prediction is that larger and front-end loaded rate hikes will follow.
