Global bond selloff drives UK 30-year gilt yield to 6%, highest since 1998
Global bond selloff pushes UK 30-year yield to 6% A worldwide bond selloff, sparked by Middle East tensions and oil-driven inflation fears, has driven the UK 30-year gilt yield above 6% for the first time since 1998. This means the government must pay more to borrow, and existing bond prices fall.
This is the main new event of the period and directly explains the sharp rise in the 30-year gilt yield.
UK sells 30-year bonds at highest yield since 1998 The UK sold £4.25 billion of 30-year bonds at a yield of 5.82%, the highest since records began in 1998. Weak demand from pension funds and high issuance costs mean the government pays more to borrow, pushing yields up.
This shows concrete evidence of rising borrowing costs and weak demand at the latest debt sale.
Chancellor's cautious budget amid fiscal pressures Chancellor Healey is preparing a cautious budget to keep market confidence, but higher debt costs and spending pressures have shrunk his fiscal buffer by about £9 billion. Investors worry about UK finances, keeping gilt yields elevated.
This highlights UK-specific fiscal concerns that add to upward pressure on gilt yields.
Market expects central banks to keep rates high Investors now expect the Fed to raise rates at least three more times by mid-2027, and the ECB to hike similarly, as inflation stays stubborn. This keeps global bond yields high, including UK gilts, as UK rates follow the global trend.
This explains the broader interest-rate environment that is pushing UK gilt yields up.