UK 10- Year Gilt Yield Surges to 2-Week High
The yield on the UK 10-year gilt has risen to 4.78%, marking a two-week peak and extending its increase for the third consecutive day. This uptick comes as global bond markets experience a sell-off fueled by renewed inflation concerns, sparked by intensifying trade tensions between the United States and China. In a recent move, China announced plans to raise tariffs on U.S. goods from 34% to 84% starting April 10 in direct response to the U.S. increasing duties on Chinese imports to over 100%. Bank of England Deputy Governor, Clare Lombardelli, highlighted that these tariffs could potentially dampen UK economic growth, although the effect on inflation remains unclear. At the same time, the UK's 30-year gilt yield has climbed to its highest point since 1998. Conversely, the 2-year yield has decreased by 10 basis points as investors heighten their expectations for potential rate cuts by the Bank of England. Currently, markets are factoring in 93 basis points of easing for the year, with increasing speculation about a 50 basis point cut in May. Additionally, market sentiment now suggests an anticipation of four rate cuts in 2025, an increase from fewer than three anticipated earlier this week.
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