UK government debt yields reach highest since 1998 as pound weakens

Investing.com -- The yield on United Kingdom (TADAWUL:4280 ) government debt, also known as gilts, reached its highest levels since 1998 on Thursday, while the British pound weakened against the dollar. This comes as investors express concerns about the escalating levels of government borrowing and a generally underperforming economy.

The yield on the 30-year gilt hit 5.455% earlier on Thursday, and the yield on the 10-year gilt rose to 4.921%, the highest level since 2008, before stabilizing later in the day.

Meanwhile, the pound dropped 0.6% to $1.2291 after dipping to $1.2239 earlier in the session, marking its lowest point since November 2023, as per FactSet data.

Matthew Ryan, Ebury's head of market strategy, noted that the fluctuations seen in UK gilts have been intense, with investors showing particular concern over the outlook for Britain's economy and the state of public finances.

The increase in yields began on Tuesday following weak demand at an auction of 30-year gilts. Bond yields rise when prices fall. This weakness in the gilt market mirrors a recent surge in bond yields globally, particularly among U.S. Treasurys.

Inflation continues to persist in many parts of the world, causing investors to reassess their positions and offload bonds.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Source: Investing.com