Bank of England's Bailey 'very alert' to risks after Trump threats over Greenland

Core Viewpoint - The Bank of England is closely monitoring geopolitical risks, which have recently intensified, impacting financial markets and economic conditions [1][2]. Group 1: Geopolitical Risks - Geopolitical risks have increased over the past year, contributing to a weaker U.S. dollar and record high gold prices, although the impact on markets and economic growth has been less severe than anticipated [2]. - The Bank of England emphasizes the need to remain vigilant regarding geopolitical uncertainties, which are significant considerations for financial stability [5]. Group 2: Market Reactions - Market reactions to geopolitical threats have been more muted than expected, with investors balancing extreme statements against historical trends where such threats are often not realized [2][3]. - The concept of "TACO" (Trump always chickens out) reflects a sentiment among some investors who discount extreme public statements made by political figures [3]. Group 3: Bond Yields and Financial Stability - U.S., British, and euro zone government bond yields have remained relatively stable this year, with Japanese government debt being an exception due to domestic political factors [5]. - Concerns about a loss of confidence in U.S. government debt potentially boosting demand for British government bonds were dismissed, as it could lead to negative consequences for the UK [6].