UK Gilt Yields Surge as Bond Selloff and Inflation Risks Intensify
UK 10-year gilt yields climbed to 5.5%, their highest since July 2007, while 30-year yields reached 6% for the first time since 1998 as a renewed global bond selloff gathered pace. The 10-year yield rose more than 20 basis points in September, as higher energy costs fueled inflation concerns and expectations that the AI boom could support economic growth strengthened the case for higher-for-longer interest rates. Several Bank of England policymakers, including Governor Andrew Bailey and MPC members who voted to hold rates last month, have signaled growing openness to a rate hike as rising energy prices increase the risk of inflation remaining above target. Markets now expect the BoE to deliver its first hike in three years by November. Higher borrowing costs come at a challenging time for the government, which is seeking to ease cost-of-living pressures ahead of the October 28 budget.
5%, their highest since July 2007, while 30-year yields reached 6% for the first time since 1998 as a renewed global bond selloff gathered pace. The 10-year yield rose more than 20 basis points in September, as higher energy costs fueled inflation concerns and expectations that the AI boom could support economic growth strengthened the case for higher-for-longer interest rates. Several Bank of England policymakers, including Governor Andrew Bailey and MPC members who voted to hold rates last month, have signaled growing openness to a rate hike as rising energy prices increase the risk of inflation remaining above target.
Markets now expect the BoE to deliver its first hike in three years by November. Higher borrowing costs come at a challenging time for the government, which is seeking to ease cost-of-living pressures ahead of the October 28 budget.