UK 10-Year Gilt Yield Climbs to 6-Week High
The yield on the UK 10-year government bond increased to 4.766%, marking its highest level in six weeks, influenced by a broader surge in European sovereign debt due to a selloff in US Treasuries. This disruption in the US bond market was mainly due to concerns surrounding President Trump's proposed tax cuts, which are projected to substantially raise the already large fiscal deficit. On the UK front, recent figures indicate a deceleration in the decline of private sector activity for April, with the composite Purchasing Managers' Index (PMI) coming in at 49.4, slightly surpassing forecasts. The manufacturing sector, however, saw a more pronounced contraction with a PMI of 45.1, whereas the services sector showed a modest recovery, reaching a PMI of 50.2. Additionally, business confidence in the UK rose to its highest level in five months. Concurrently, borrowing by the UK public sector escalated to £20.2 billion in April, the fourth-highest amount recorded for April borrowing.
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