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Analysis Paul Kelsobusiness and economics correspondent

UK markets stabilized on Friday, giving Rachel Reeves some confidence as investors, politicians and businesses continued to grasp the scale and impact of her first Budget.

There was an unusually large rise in UK government borrowing costs on Thursday in response to a massive package of tax hikes and increased borrowing.

The yield on Britain’s benchmark 10-year bond (effectively the interest rate the government pays to borrow) rose to its highest level this year, up 0.1% to 4.52%.

It wasn’t a Leese Truss moment – Kwasi Kwarteng’s mini-budget sparked its biggest one-day gain in more than two decades and pushed the pound down 8%.

But the move was significant enough to cause echoes of that crisis, which Ms Reeves’ opponents, some of whom were in the Liz Truss government at the time, quickly seized on.

Interpreting money markets is a complex and imprecise science—those who master it tend to make more money than journalists—but the pay rise appears to be a response to two factors.

First, there is a small premium for increased demand for UK debt, implied by spending and borrowing plans exceeding market expectations.

Secondly, there is the possibility that this huge budget could be inflationary and therefore slow down the Bank of England’s plans to cut interest rates. Bond prices both determine base rates, and if markets think the Bank is going to keep them higher for longer, this is reflected.

The government doesn’t officially comment on market movements, but Reeves’ surprise interview with Bloomberg financial planners on Thursday afternoon and the appearance of her No. 2 Darren Jones on Friday’s morning round suggested a desire to calm any turmoil.

Maybe it worked. After initially jumping higher on Friday morning, gold bond yields eased, falling below Thursday morning’s opening price by lunchtime before rebounding in line with U.S. Treasuries in the afternoon.

They ended the week higher than before the budget, which could be interpreted as a small “risk premium” for the UK.

Meanwhile, the pound has recovered the penny lost against the dollar since Reeves sat in the House of Commons on Wednesday afternoon.

What happens next will be partly determined by the Bank of England’s Monetary Policy Committee, which meets on Thursday. In addition to the interest rate decision, it will provide new growth and inflation forecasts that could further impact investor sentiment.

It remains highly likely that rates will be cut by at least 0.25 percentage points to 4.75%, with a 90% chance of a similar Christmas cut at the next meeting in late December.

This would be welcome news for consumers, not to mention Reeves.