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

By David Milliken

LONDON, Jan 20 (Reuters) - The Bank of England indispensable beryllium "very alert" to geopolitical risks, Governor Andrew Bailey said connected Tuesday arsenic fiscal markets were thrown into caller ​turmoil by U.S. President Donald Trump's stated tendency to power Greenland and the hazard of a ‌trade war.

Wall Street futures deed one-month lows, portion the dollar entered a 2nd time of declines and long-dated authorities enslaved yields ‌rose sharply.

Bailey, responding to lawmakers' questions, said geopolitical risks had risen implicit the past year, contributing to U.S. dollar weakness and grounds precocious golden prices, but the interaction connected markets and economical maturation had been little than feared truthful far.

"We interest considerably astir however markets tin respond to those things. Market reactions person really been ⁠more muted than we would person ‌feared and expected," Bailey told the British parliament's Treasury Committee.

Investors were having to equilibrium "extreme" statements against their acquisition that specified threats were mostly not carried out, helium ‍said.

Some investors person taken an attack of discounting Trump's nationalist statements, known arsenic "TACO", abbreviated for "Trump ever chickens out".

"I'm not saying I'm a believer successful this benignant of 'TACO trade' notion. But did the tariffs travel done to immoderate of the ​more utmost things that were being said?" Bailey said.

"After Liberation Day (tariff announcements) ... the U.S. authorities reconsidered. As a ‌result, the marketplace volatility that we saw ... calmed down."

Asked however acrophobic the BoE was astir Trump's pursuit of Greenland and commercialized tensions, Bailey said helium did not privation to accidental that circumstantial issues could beryllium a trigger for upheaval successful the fiscal system.

"But the level of geopolitical uncertainty and the level of geopolitical issues is evidently a large consideration," Bailey said. "We person to stay precise alert to these things," helium ⁠said.

BoE Deputy Governor Dave Ramsden said that truthful acold ​this year, yields connected U.S., British and euro portion authorities bonds ​had been reasonably stable, with Japanese authorities indebtedness being the exception, owed to home governmental factors.

He rejected the proposition from 1 lawmaker that immoderate nonaccomplishment of assurance successful ‍U.S. authorities indebtedness could boost ⁠demand for British authorities bonds.

"Given our comparative reserve currency statuses ... it would person antagonistic consequences," helium said. "Increasingly we are seeing that U.S. yields mightiness emergence and we spot the effect successful our ⁠yields rising."