UK Gilt Yields Ease From Recent Highs
UK 10-year gilt yields eased to 5.35% after reaching their highest level since July 2007 last week, helped by lower oil prices and a pause following the recent sharp sell-off. Yields remain elevated, however, as high energy costs have fueled inflation concerns and stronger-than-expected economic growth reinforced expectations for interest rates to stay higher for longer. BoE policymaker Catherine Mann said on Tuesday that inflation above the Bank’s 2% target appeared to have become embedded in the economy. She warned that inflation could reach 4% around the turn of the year, when wage negotiations typically take place, potentially further entrenching price pressures. On the data front, UK construction activity continued to contract in September, although at a slower pace than expected. Builders also became less optimistic about the outlook, delaying major projects as higher rates, inflation and weak orders weighed on growth expectations.
35% after reaching their highest level since July 2007 last week, helped by lower oil prices and a pause following the recent sharp sell-off. Yields remain elevated, however, as high energy costs have fueled inflation concerns and stronger-than-expected economic growth reinforced expectations for interest rates to stay higher for longer. BoE policymaker Catherine Mann said on Tuesday that inflation above the Bank’s 2% target appeared to have become embedded in the economy. She warned that inflation could reach 4% around the turn of the year, when wage negotiations typically take place, potentially further entrenching price pressures.
On the data front, UK construction activity continued to contract in September, although at a slower pace than expected. Builders also became less optimistic about the outlook, delaying major projects as higher rates, inflation and weak orders weighed on growth expectations.