UK Gilt Yields Hold Steady as Investors Await Budget

UK 10-year gilt yields held steady around 5.33% as investors assessed mixed economic data ahead of next week’s budget. UK assets, including gilts and sterling, have attracted stronger demand as concerns over social unrest and mounting debt across the eurozone prompted investors to shift away from other regional markets. Flash PMI data showed business activity accelerated to an eight-month high, beating forecasts, while retail sales fell more sharply than expected in September and consumer confidence suffered a steep decline in October. Stronger-than-expected inflation data fueled expectations of further monetary tightening, with markets pricing in at least three quarter-point rate hikes by April 2027 and the first potentially coming as early as November 5. Ahead of next week’s budget, investors appear to be giving Chancellor John Healey the benefit of the doubt, with gilt markets remaining unusually calm despite concerns over ambitious spending plans that have yet to be fully costed.