Photo: Wiltshire TimesPhoto: Wiltshire TimesUnited Kingdom
UK 10-year gilt yield rebounds above 5.2% ahead of Bank of England decision
Gilt yields moved off two-month lows as markets braced for the Bank of England's first rate hike since 2023, with borrowing costs and bond sales both in focus.
What happened
The UK 10-year gilt yield climbed back above 5.2% on Tuesday, recovering from near two-month lows. tradingeconomics.com Investors were waiting for Thursday's Bank of England policy decision and the US midterm elections. tradingeconomics.com Markets widely expect the Bank to deliver its first interest rate hike since 2023, citing inflationary pressures linked to the Iran war and signs of resilience in the UK economy. tradingeconomics.com Policymakers are expected to push back against market expectations of further rate increases next year. tradingeconomics.com
Around it
UK borrowing costs eased in October after Chancellor John Healey's first budget reassured investors by adhering to the government's fiscal rules. tradingeconomics.com A Bloomberg Economics study found UK rates are likely close to their neutral level, meaning policy is neither weighing down nor pushing up inflation, which strengthens the case for a hike. Bloomberg Bank officials had argued that policy was already restrictive when the Iran war sent energy prices soaring. Bloomberg Separately, September documents on the Bank's gilt sales moved the longest-dated gilts, maturing between 2049 and 2071, out of the sell-off and relabelled them as backing for banknotes, so the Monetary Policy Committee now oversees a full unwind of £368bn rather than £488bn. Yahoo News
What comes next
The Bank of England announces its policy decision on Thursday. tradingeconomics.com
Sources
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- Photo: Wiltshire Times
Photo: Yahoo News
Photo: Yahoo News