UK 10-Year Gilt Yield Falls to 3-Week Low
The UK 10-year gilt yield slipped below 5.35%, the lowest in three weeks, as investors assessed stronger-than-expected economic growth and its implications for monetary policy. GDP expanded by 0.1% in August, following a 0.4% increase in July, avoiding forecasts of a contraction. Output also grew 0.7% over the three months to August, marking a fourth consecutive month in which growth exceeded expectations. The resilience of the economy, despite elevated energy costs and borrowing expenses, has drawn attention from Bank of England policymakers. Some rate-setters are weighing whether another increase in interest rates may be needed next month to contain inflation risks linked to the energy shock from the Iran war. The figures also arrive ahead of Chancellor John Healey’s first budget on October 28. Although stronger activity could prompt an upgrade to the UK’s growth outlook, rising gilt yields and pressure to support households leave the government with limited fiscal flexibility.
35%, the lowest in three weeks, as investors assessed stronger-than-expected economic growth and its implications for monetary policy. 4% increase in July, avoiding forecasts of a contraction. 7% over the three months to August, marking a fourth consecutive month in which growth exceeded expectations. The resilience of the economy, despite elevated energy costs and borrowing expenses, has drawn attention from Bank of England policymakers.
Some rate-setters are weighing whether another increase in interest rates may be needed next month to contain inflation risks linked to the energy shock from the Iran war. The figures also arrive ahead of Chancellor John Healey’s first budget on October 28. Although stronger activity could prompt an upgrade to the UK’s growth outlook, rising gilt yields and pressure to support households leave the government with limited fiscal flexibility.