What's going on?

The Bank of England (BoE) announced emergency moves to rescue the bond market on Wednesday.

What does this mean?

The British economy has been less stable than Kanye West�s love life lately, with investors � eager to rid themselves of UK assets � knocking government bonds into free fall and sending pension funds� holdings down with them. That�s bad news: pension funds implement some strategies using debt, and the current selloff means that brokers are asking for more collateral to cover those potential losses � in what are known as margin calls. But that�s got the BoE all sweaty and nervous: if pension funds started selling off investments to raise cash, it could hit prices even more and sink the market altogether. So, in order to prevent a full meltdown (and salvage millions of Brits� hard-earned pensions), the BoE announced that it�s stepping in and buying up bonds on �whatever scale necessary� to stabilize markets. The effect was immediate: when the news broke, 30-year bonds headed for their biggest rally on record.

Why should I care?

The bigger picture: Why are you hitting yourself?
This all puts the BoE in a weird position: see, by buying bonds en masse, the BoE�s flooding markets with cash, a step that�s normally inflationary � but at the same time, it�s hiking rates in a bid to calm inflation. Whatever happens next, then, one thing�s pretty sure: the central bank will have to be even more aggressive with interest rate hikes from now on � which could hit economic growth even harder.

For markets: Hunting season.
The UK�s dire economic situation means it could be open season for takeovers by overseas buyers. After all, low valuations, a sinking pound, and favorable regulations have made British firms attractive targets � so it�s no surprise that 70% of top takeover picks are British right now, according to a recent poll.