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The Bank of England has launched a temporary bond-buying programme as it takes emergency action to prevent “material risk” to UK financial stability.

It revealed that it would buy as many long-dated government bonds as needed between now and 14 October in a bid to stabilise financial markets in the wake of the mayhem that followed the government’s mini-budget last Friday.

In addition to the plunge in the value of the pound, it has also seen investors demand a greater rate of return for UK government bonds – essentially IOUs.

That is because the level of borrowing required to fund the government giveaway, including tax cuts and energy aid for households and businesses, shocked the market which immediately questioned the sustainability of the public finances.

Pension funds would have collapsed today without BoE intervention – economy latest

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Govt sticking to ‘mini budget’ despite turmoil

The International Monetary Fund has since added its voice to criticism of the growth plan.

What the Bank’s action is aimed at doing is tackling consequences of rising bond yields, in this instance a liquidity crunch facing pension funds.

The pound fell back in response but bond yields did ease back from multi-year highs.

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WHY THE BANK OF ENGLAND HAS ACTED


 Ian King

Ian King

Business presenter

@iankingsky

There are some very, very specific reasons why the Bank of England is intervening in this particular asset class in long-dated gilts – that’s gilts of a 20 to 30 year duration.

It affects traditional pension funds where a retiree is guaranteed a certain payout at their retirement based on their final salary when they retire.

Now, a lot of these funds use long-dated gilts as part of their investments and what has been happening over recent days is a lot of the investment funds have been asking pension funds to post more collateral – to put up cash.

It has been reported in The Times that actually these cash calls have been running into tens of billions of pounds since the beginning of the week because of this spike in long-dated gilt yields.

That is why the Bank of England is specifically targeting that with this gilt intervention.

It is aimed at seeing off a crisis that’s potentially starting to emerge in pension funds.

The Bank said in a statement: “Were dysfunction in this (long-dated bond) market to continue or worsen, there would be a material risk to UK financial stability.

“This would lead to an unwarranted tightening of financing conditions and a reduction of the flow of credit to the real economy.”

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Senior Tory blames mini-budget for turmoil

City minister Andrew Griffith denied that the government should take responsibiity for the crisis.

“We are seeing the same impact of Putin’s war in Ukraine cascading through things like the cost of energy, some of the supply side implications of that, and that’s impacting every major economy and just to save every major economy, you’re seeing interest rates going up as well.

“Every major economy is dealing with exactly the same issues,” he told Sky’s economics editor Ed Conway.

“They [the bank] have made a targeted and timely intervention in the market. That’s their decision, but they’ve done so working very closely with the chancellor,” he added.

The programme marked the Bank’s first policy intervention as it battles to bring down inflation and ease the cost of living crisis. Its chief economist signalled on Tuesday that a “significant” rise in Bank rate was also likely ahead.

The government’s growth plan is only seen as adding inflationary pressure to the economy, leaving it at loggerheads with the Bank’s mandate.

The Bank said the bond purchases, which would be fully covered by the Treasury in the event of any losses, would be sold back once market conditions had stabilised.

The announcement certainly had an immediate effect on the market.

Data showed that 30-year bond yields fell back to 4.3%, having risen to levels above 5% not seen since 2002 earlier in the day. There were similar falls for 20-year yields.

Those for 10-year bonds also fell back below 4% from 4.6%.

Stock markets, which had endured widespread falls Europe-wide amid recession fears, erased some of their losses.

The FTSE 100 had been almost 2% down but was just 0.8% lower on the day just before 1pm.

The pound, however, was a cent and a half down versus the dollar shortly after the announcement, to stand at $1.0578, and a cent lower against the euro. It later moved back towards $1.07 as market surprise at the intervention eased.

The single European currency was also suffering against a resurgent US currency.

In addition to its bond-buying action, the Bank said it would postpone the start of its efforts to unwind the sale of bonds it acquired through financial crisis and COVID crisis era quantitative easing.

The Bank had planned to reduce its £838bn of gilt holdings by £80bn over the next year.

Neil Wilson, chief markets analyst at Markets.com, said the Bank’s move followed evidence of “severe liquidity stress”.

This would have been particularly evident for pension funds who have faced demands for additional cash to cover off rising yields.

“The question is whether (this Bank action) acts to stabilise longer-term or if the market retests the Bank’s resolve,” he wrote.

“We’re now seeing the Bank go toe-to-toe with the market and this might not lead to any decrease in volatility.”

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What is freezing rain and what makes it so dangerous?

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What is freezing rain and what makes it so dangerous?

An amber warning for snow and ice, with the risk of freezing rain, covers most of Wales and central England until midday on Sunday.

Freezing rain, which makes up what are commonly known as ice storms in North America, is a rarity in the UK because the conditions for it are quite specific, according to the Met Office.

But what is it and how is it different to snow?

Freezing rain is rainfall that has become “supercooled” as it falls from the sky.

Up to 30cm of snow expected in parts of UK – follow live

It starts when snow, ice, sleet or hail high up in the atmosphere melts into rain when it falls through the layers of warmer air below.

If the rain then passes through a sub-zero layer of air just above the ground, it can remain liquid and instead become “supercooled”. This is the key to freezing rain.

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Supercooled water will freeze on impact – forming a clear layer of ice on cold surfaces such as trees, roads and power lines.

Why is it dangerous?

It’s once it hits the surface and turns to ice that it can pose a real threat.

The ice is very clear, often referred to as black ice, because it is so difficult to see, making it treacherous for pedestrians and drivers.

Freezing rain settled on a car. Pic: iStock
Image:
Freezing rain on a car. Pic: iStock

Sky News meteorologist Kirsty McCabe explains: “The supercooled rain hits the ground and freezes instantly on impact, and that creates a thin layer of ice, also known as glaze, and it’s clear, so you can’t see the ice, which makes it really treacherous.”

If it hits power lines or tree branches, depending on how much rain there has been, the weight of the ice can cause them to break off because they can’t support the weight.

It can also make it difficult to open your car door if there is enough of it.

Get the five-day forecast where you are

Where is it expected to fall?

From 6pm on Saturday to midday on Sunday an amber warning for snow and ice, with the risk of freezing rain, covers most of Wales and central England, including the Midlands and Liverpool and Manchester in the North West.

But McCabe says it’s Wales where people should be particularly wary of freezing rain.

What precautions should people take?

The best thing people can do is take extra care when travelling. As it is so hard to see, it’s difficult to judge just how icy road surfaces are.

The RAC says freezing rain is arguably the most treacherous of all conditions for motorists.

They urge people not to drive unless necessary, but say those who do need to should check they have plenty of fuel and oil and check their tyre treads.

They also encourage drivers to make sure their lights are working and check they have screenwash.

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King deeply saddened by death of Briton in New Orleans attack – as reports say victim is stepson of ex-royal nanny

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King Charles deeply saddened by death of Briton in New Orleans attack - as reports say victim is stepson of ex-royal nanny

The King is deeply saddened by the death of a British man who was killed in the attack in New Orleans on New Year’s Day – amid reports he was the stepson of an ex-royal nanny.

Edward Pettifer, from Chelsea, west London, was fatally injured in the tragedy, the Metropolitan Police confirmed.

Sky News understands the King was made aware of Mr Pettifer’s death through official channels, was deeply saddened, and has been in touch with the family to share personal condolences.

The 31-year-old’s family said they were “devastated” by his death.

“He was a wonderful son, brother, grandson, nephew and a friend to so many,” the family said in a statement.

“We will all miss him terribly. Our thoughts are with the other families who have lost their family members due to this terrible attack. We request that we can grieve the loss of Ed as a family in private.”

New Orleans’ coroner said the preliminary cause of death for Mr Pettifer was blunt force injuries.

Police vehicles are parked near the site of a fatal truck attack in New Orleans, Louisiana, on Jan. 1, 2025. At least 15 people were killed and dozens injured in a suspected terrorist attack earlier in the day when a pickup truck was driven into a crowd celebrating New Year's Day in a popular tourist spot in the southern U.S. city, according to U.S. media. (Kyodo via AP Images) ==Kyodo
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Emergency crews at the scene of the attack. Pic: AP

FBI agents at the scene of the attack in New Orleans. Pic: Reuters
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FBI agents at the scene. Pic: Reuters

Fourteen people were killed and dozens injured when 42-year-old army veteran Shamsud-Din Jabbar’s rented truck rammed into people in New Orleans’ famous Bourbon Street in the early hours of New Year’s Day.

Jabbar was killed in a shootout with police.

The Federal Bureau of Investigation (FBI) said the attack was “premeditated” and an “evil” act of terrorism, and added Jabbar was “100% inspired by ISIS”, also known as Islamic State.

An IS flag that was attached to the pick-up truck that was driven down Bourbon Street
Image:
An IS flag was attached to the pick-up truck that was driven down Bourbon Street

The preliminary cause of death for all the victims was blunt force injuries, according to the New Orleans coroner.

The coroner has identified most of those killed in the attack, with efforts continuing to identify the final female victim.

• Edward Pettifer, 31, from Chelsea, west London
• Andrew Dauphin, 26, from Montgomery, Alabama
• Kareem Badawi, 23, from Baton Rouge, Louisiana
• Brandon Taylor, 43, from Harvey, Louisiana
• Hubert Gauthreaux, 21, from Gretna, Louisiana
• Matthew Tenedorio, 25, from Picayune, Mississippi
• Ni’Kyra Dedeaux, 18, from Gulfport, Mississippi
• Nicole Perez, 27, from Metairie, Louisiana
• Reggie Hunter, 37, from Prairieville, Louisiana
• Martin Bech, 27, from New York City, New York
• Terrence Kennedy, 63, from New Orleans, Louisiana
• Elliot Wilkinson, 40, from Slidell, Louisiana
• William DiMaio, 25, from Holmdel, New Jersey

Victims of the New Orleans attack, clockwise from top left: Reggie Hunter, Martin 'Tiger' Bech, Nicole Perez and Matthew Tenedorio
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Some of the victims of the New Orleans attack, clockwise from top left: Reggie Hunter, Martin ‘Tiger’ Bech, Nicole Perez and Matthew Tenedorio

Billy DiMaio (L) and Terrence Kennedy
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William DiMaio (left) and Terrence Kennedy

Read more:
What we know about suspect

British man, aspiring nurse and Princeton University football player among victims
Did New Orleans authorities fail the victims of the New Year terror attack?

An Islamic State (IS) flag, weapons, and what appeared to be an improvised explosive device (IED) were found in the vehicle used in the attack, the FBI said.

The suspect posted five videos on social media before the rampage in support of IS, the agency added.

In his first clip, Jabbar said he was planning to harm his own family and friends, but was concerned headlines would not focus on the “war between the believers and disbelievers”, said Christopher Raia, deputy assistant director of the FBI’s counter-terrorism division.

Jabbar also joined IS “before this summer”, and provided a will, the FBI chief said.

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The half-brother of the attack suspect said ‘this wasn’t the man I knew’

In an interview with a Texas-based TV station, owned by Sky News’ partner network NBC News, Jabbar’s younger half-brother said he was thinking about all those impacted by the attack.

Abdur-Rahim Jabbar said: “This is a tragedy. We’re all grieving about this.”

The suspect was a Muslim, with his sibling adding: “This wasn’t the man I knew. This wasn’t the father, the son that I knew.

“And that also, this isn’t any representation of Islam or Muslims or the Muslim community.”

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Stargazers treated to rare sight as Venus appears beside crescent Moon

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Stargazers treated to rare sight as Venus appears beside crescent Moon

Stargazers spied an unusual sight on Friday night, as Venus appeared beside a crescent moon.

The planet could be seen with the naked eye in locations lucky enough to have clear skies and incredible pictures show it seemingly shining.

Venus is often called the Morning or Evening Star, as it can easily be mistaken for a bright star.

 03 January 2025, Brandenburg, Sieversdorf: The 16 percent visible crescent moon can be seen together with Venus (at the top of the image) in the early evening sky. After the sun and the moon, the planet Venus is the brightest astronomical object in the night sky. Photo by: Patrick Pleul/picture-alliance/dpa/AP Images
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The view from Sieversdorf, Germany. Pic: AP

03 January 2025, Brandenburg, Sieversdorf: The 16 percent visible crescent moon can be seen together with Venus (at the top of the image) in the early evening sky. After the sun and the moon, the planet Venus is the brightest astronomical object in the night sky. Photo by: Patrick Pleul/picture-alliance/dpa/AP Images
A crescent moon and the planet Venus straddle a cross on top of Quebec Baptist Church in Ellaville, Georgia, U.S. January 3, 2025. REUTERS/Sam Wolfe
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The Moon and Venus straddle a cross on top of Quebec Baptist Church in Ellaville, Georgia. Pic: Reuters

January looks set to be a good month for stargazers and astronomers, as numerous celestial phenomena will be visible across the coming weeks.

The Quadrantid meteor shower is at its peak this weekend and visible until 12 January.

A crescent moon and the planet Venus are seen next to an oak tree in Ellaville, Georgia, U.S. January 3, 2025. REUTERS/Sam Wolfe
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Venus – seen here from Georgia, USA – didn’t appear as bright when viewed from the States. Pic: Reuters

On 16 January, there’s a strong chance you’ll be able to see Mars as the red planet will be in “opposition”, meaning Earth will be directly between it and the sun.

Just under a week later, on 21 January, you could see five planets – Saturn, Venus, Uranus, Jupiter and Mars – in the night sky after 9pm, according to the Royal Observatory Greenwich.

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Four of the planets should be visible to the naked eye, but seeing Uranus will require a telescope or very dark skies.

Anyone hoping to spot celestial phenomena is advised to find a stargazing spot away from light pollution and to allow at least 15 minutes for your eyes to adjust to the darkness.

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