Home›Bonds & Rates›Government Bonds›UK pays 5.82% on 30-year bond, highest since 1998

UK pays 5.82% on 30-year bond, highest since 1998

The Treasury sold £4bn of 30-year debt at 5.82%, a pricing pressure that the Bank of England linked to rising oil prices and stronger inflation and interest-rate concerns.

Reported · Written up by our desk · Government Bonds

The UK government was forced to pay the highest interest rate on a 30-year bond since 1998, signaling mounting financing pressure as global bond yields climb. According to the Guardian, the Treasury paid 5.82% to borrow £4bn in the auction.

The report said the higher borrowing costs threaten to erode the budget headroom that chancellor John Healey expected to have before the budget, with the Office for Budget Responsibility forecast due before 28 October. It added that higher interest rates are expected to wipe out at least half of £24bn headroom built up earlier this year.

In remarks to MPs, Bank of England governor Andrew Bailey pointed to renewed oil-price increases as a driver of upside risks for inflation and interest rates. He also said mortgage rates are now typically about three quarters of a percentage point higher than they were when the Middle East conflict broke out.

The Guardian noted that Brent crude traded at about $97 a barrel on Tuesday as markets priced in the effect of energy costs on inflation and the interest-rate outlook. Bailey said there is no secret plan to raise interest rates, but that higher borrowing costs have already affected consumers, including mortgage pricing.

Latest closeWTI crude $90.70 ▲0.5%|Brent $95.32 ▲0.7%

More like this

Sources