Long-term government borrowing costs in the UK have risen sharply, with 30-year gilt yields reaching 5.61 percent, the highest since 1998. The 10-year gilt yields also increased to 4.74 percent. These trends are attributed to concerns over public finances and inflation, which may hinder the Bank of England's ability to cut interest rates further. Investors expect July's inflation to rise slightly from June. The market anticipates public finance updates, with potential tax rises indicated for the autumn budget due to rising pressures.
The yield on 30-year bonds rose to 5.61 per cent, nearing the 27-year high last reached in May 1998, highlighting the UK’s increased borrowing costs.
Investor anxiety over Britain’s public finances is growing, with inflation concerns limiting the Bank of England's ability to reduce interest rates further.
The upcoming consumer price index figures are anticipated to rise from 3.6 per cent in June to 3.7-3.8 per cent for July, intensifying market scrutiny.
Simon French emphasized that structural changes, such as the closure of defined benefit pension schemes, are reducing demand for long-dated gilts.
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