US EditionPound drops as 30-year gilt yields at highest level this century
Investors worry about UK debt and inflation as 30-year bond yields reach 5.72%, the highest this century, pressuring the pound against major currencies.
- Pound sterling weakened as 30-year UK government bonds hit their highest borrowing cost since 1998, with one pound buying $1.336 on Monday morning, down from $1.353 earlier in the day.
- Inflation and pandemic-era public debt have widened the gap between state spending and income, while Chancellor Rachel Reeves faces U-turns on winter fuel payments and welfare spending cuts, complicating UK government finances.
- UK and US bond moves were linked, with UK government bonds mirroring US rates as yields rose globally, pushing sterling down sharply against the euro to a low not seen years ago.
- More expensive borrowing has left the UK stuck in rising debt, and U-turns on spending mean Chancellor Rachel Reeves must seek alternative savings to meet fiscal rules.
- Because UK government bonds track US rates, further US bond market moves could increase volatility in sterling, while rising debt servicing costs may squeeze public spending and complicate fiscal targets for Chancellor Rachel Reeves.
8 Articles
8 Articles
UK Markets Slide as Debt Angst Drives 30-Year Yield to 1998 High
UK markets suffered a fresh selloff on Tuesday, with the yield on long-dated bonds hitting the highest since 1998 and the pound tumbling, as pressure mounted on Prime Minister Keir Starmer to win the confidence of investors in the government’s budget.
Bond traders hit out at ‘chorus’ of high tax advocates in No 10
Bond traders have hit out at the “chorus” of Westminster voices advocating for higher taxes as government borrowing costs soared to the highest level seen this century. Gilt yields, which feed into the cost the government will have to pay bondholders through debt interest payments, soared to their highest level since 1998, with the interest rate on the 30-year government bond surpassing the 5.7 per cent mark on Tuesday afternoon. The yield on …
British government long-term bond returns have risen to their highest level since 1998, while the pound sterling has declined, putting pressure on Prime Minister Kirstarmer's government to restore investors' trust in fiscal expectations. Bond returns for 30 years have jumped by 5 basis points to register 5.69%, while the pound has declined by more than 1% to become weaker among major currencies.
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