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Bank of England sees global financial risks after Trump victory 

December 2, 2016

David Milliken & Huw Jones, Reuters

Donald Trump's victory in the U.S. presidential election has increased the threats to the world economy from higher interest rates and less trade, the Bank of England said on Wednesday.

The BoE also pointed to potential dangers from rapid Chinese credit growth or a disorganised British departure from the European Union in a half-yearly assessment of risks to Britain's financial system.

BoE Governor Mark Carney highlighted a big rise in U.S. market interest rates since Trump's victory, which the Bank said could be a precursor to a destabilising sharp move higher in global government borrowing costs from previous record lows.

Yields on U.S. 10-year government bonds - which influence borrowing costs globally - are on track for their biggest monthly rise since December 2009 following Trump's unexpected victory on Nov. 8.

"The U.S. election has reinforced existing vulnerabilities," the central bank said in its report. "The rise in advanced economy sovereign yields, coupled with risks of reduced global trade, has reinforced the vulnerabilities associated with those emerging market economies with high levels of debt." Read more

 
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