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UK 10-year gilt yields fall as bond turmoil cools
The drop in UK 10-year yields comes as Fed governor Christopher Waller signals he is leaning toward keeping US rates steady, easing pressure on global borrowing costs.
Bond market stress eased on Thursday morning, with UK gilt yields sliding from an 18-year high set the prior day, improving conditions for borrowers as bond prices strengthened. The yield on UK 10-year government debt fell by more than 4 basis points to about 5.195%, and was later cited around 5.13%, down 10 basis points, according to Guardian Economics. The outlet also linked the calmer tone in markets to falling oil prices, with Brent crude down about 0.5% to roughly $95.20 a barrel, which helped reduce fears of an inflation shock that could push rates higher.
In the United States, Fed governor Christopher Waller helped steady sentiment by indicating he was leaning toward holding US interest rates unchanged at the September meeting, Guardian Economics said. In contrast, the Bank of England’s chief economist Huw Pill continued to press for a rise in UK borrowing costs.
The article said mortgage rates are expected to rise, driven by the earlier jump in UK bond yields, even as the latest move suggests a brief cooldown in the sell-off. It also noted that borrowing costs in other European markets were dipping, including Germany and France, as the session began.
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