In the last few days the financial press has been dominated by the collapse of the pound and the subsequent spike in UK short bond yields. Much blame has been heaped on the proposals of chancellor Kwasi Kwarteng, with Twitter wags talking about the “KamiKwasi budget,” and so on. This may or may not be deserved; Unhedged is even more out of its depth than usual on that topic. Certainly the latest leg down in the pound looks like a direct response to the budget, as Katie Martin points out. And unfunded tax cuts in the face of inflation seem batty to us. But the overarching point is that the UK is not alone.

This chart of year to date quarterly currency moves against the dollar comes to us from Simon Quijano-Evans of Gemcorp:

Everything is down against the dollar, and the pound has plenty of company among developed market currencies. What is happening to the pound, the krona, the krone, the yen and the euro, all at once? The Fed is. A stronger dollar is the global transmission policy of the Federal Reserve’s rate policy, that policy is tightening fast, and it is uncertain where it will stop.