UK 30-year bond yields hit a 27-year high, but government borrowing costs remained flat because the Treasury shifted issuance toward five- and ten-year debt. The rise in long-term yields is part of a global steepening of yield curves, largely driven by pension funds moving away from long-term financial products. The 30-year yield is not currently being used for government funding. Yields represent the interest investors demand to lend to governments or companies. Uncertainty has increased over the timing and pace of future Bank of England rate cuts despite a recent reduction from 4.25% to 4%.
There is a lot of dramatic commentary on this but I wouldn't exaggerate the 30-year bond rate, he said. It's a number that gets quoted a lot. It's quite a high number. It is actually not a number that is being used for funding at all at the moment.
You have seen a steepening of yield curves across the whole developed world really the underlying driver of this is global, he said.
Although we've taken a further step, and although I think that the path will continue to be downwards, gradually over time, because policy is still restrictive there is now considerably more doubt about exactly when and how quickly we can make those further steps.
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