The yield on the UK 10-year Gilt fell to 4.88% after last week’s sharp increase, which pushed yields to their highest levels in decades due to concerns over government finances and stubbornly high inflation.
UK 10-year Gilt yield halts rally
A £1 billion auction of 30-year inflation-linked bonds saw strong demand, with a bid-to-cover ratio of 3.06 and a yield of 2.126%. On Wednesday, the UK is set to auction £4 billion in 10-year Gilts, coinciding with the release of consumer inflation data. Persistently high inflation could lead investors to reassess expectations for Bank of England rate cuts, adding pressure to the UK bond market.
Strict fiscal discipline ahead
In response to recent market volatility, Britain’s finance ministry reaffirmed its commitment to strict fiscal discipline. Meanwhile, reports indicate that President-elect Donald Trump’s team is considering a gradual implementation of trade tariffs, with monthly increases of 2% to 5%.
