UK Bond Yields Edge Up
UK 10-year gilt yields edged above 5.15%, recovering from recent two-month lows and tracking US Treasury yields higher, after a strong US jobs report reinforced expectations of a Fed rate hike next month. Even so, the bond market remained supported globally by a broader flight to safety, as investors rotated out of tech stocks amid concerns that a Democratic sweep in the US midterm elections could pave the way for tighter AI regulation and slower infrastructure investment. Meanwhile, markets continued to assess the implications of the Bank of England's policy decision on Thursday, where the central bank raised interest rates for the first time in more than three years. Governor Andrew Bailey signaled that further tightening may be necessary unless the war in Iran is resolved. As a result, markets have strengthened their expectations for additional monetary tightening, with three more rate increases now fully priced in by November 2027.
UK 10-year gilt yields edged above 5.15%, recovering from recent two-month lows and tracking US Treasury yields higher, after a strong US jobs report reinforced expectations of a Fed rate hike next month. Even so, the bond market remained supported globally by a broader flight to safety, as investors rotated out of tech stocks amid concerns that a Democratic sweep in the US midterm elections could pave the way for tighter AI regulation and slower infrastructure investment. Meanwhile, markets continued to assess the implications of the Bank of England's policy decision on Thursday, where the central bank raised interest rates for the first time in more than three years.
Governor Andrew Bailey signaled that further tightening may be necessary unless the war in Iran is resolved. As a result, markets have strengthened their expectations for additional monetary tightening, with three more rate increases now fully priced in by November 2027.