"The yield on 10-year gilts has surged to its highest levels since the global financial crisis of 2008, ending last week a whisker off 5%. This will push up the government's cost of borrowing, and by extension the cost of just about everything it wants to do."
"With oil prices up about 50% since the onset of the war, and its impact rippling out into other commodities, the jump in yields reflects higher expectations for inflation and interest rates."
"Investors who had been betting on further rate cuts in the UK have dramatically reversed course, and now expect rates to rise twice or more this year, as the Bank of England reacts to surging prices."
The ongoing conflict in the Middle East has caused a surge in gilt yields, which affects the UK government's borrowing costs. Rachel Reeves's fiscal headroom of £23 billion is now at risk due to economic chaos. The yield on 10-year gilts has reached its highest level since the 2008 financial crisis, nearing 5%. This increase is driven by rising oil prices and inflation expectations, leading investors to anticipate multiple interest rate hikes from the Bank of England this year.
Read at www.theguardian.com
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