UK 10-year gilt yield hits highest since July 2007 at 5.441%
The 30-year gilt yield falls 11 basis points after the Bank of England pauses sales of long-dated debt
Published
The 10-year gilt yield climbs to 5.441%, its highest level since July 2007.
The move comes as UK inflation expectations rise. Citi/YouGov data show long-term inflation expectations at 4.3% in September, up from 4.1% in August. At its September meeting, six of the Bank of England's nine rate-setters backed holding the Bank Rate at 3.75%. Deputy governor Dave Ramsden said food prices had come in weaker than expected but flagged upside risks to inflation, citing local food costs and wage agreements, and described the Bank's quantitative tightening plan as a credible and logical strategy. Governor Andrew Bailey said on Friday that artificial intelligence could cushion the economy against energy price shocks, adding that pass-through from high energy prices had been subdued so far, though it was too early to judge.
The 30-year gilt yield is moving the other way, down 11 basis points, after the Bank of England paused its sales of long-dated debt. The central bank is reported to plan gilt sales spanning maturities from 2033 to 2049 once that pause ends.
The rise in the 10-year yield reflects a hawkish repositioning by the Bank of England and expectations of further rate increases, while the drop at the long end suggests the market is already pricing in the tightening cycle and finding some relief in reduced future supply. With inflation expectations still elevated and the Bank signalling that hikes could follow if energy prices persist, the move looks more like a normalisation of pricing than a fresh catalyst, leaving the directional bias neutral for now.