Gilt yields near Mini Budget highs after hotter-than-expected UK inflation

Markets raise peak rate expectations

Valeria Martinez
clock • 2 min read

Gilt yields have soared to levels not seen since the Mini Budget following the release of worse-than-expected UK inflation data on Wednesday (24 May), and the prospect of a higher terminal rate.

The UK headline CPI rate of 8.7% in April surprised to the upside, despite falling from 10.1% in March. The reading was above both economist expectations of 8.2% and the 8.4% projection from the Bank of England earlier this month.  While the headline figure fell, core CPI rose to its highest level since 1992, at 6.8% versus the forecast 6.2%, adding to fears inflation is becoming entrenched and forcing markets to increase their terminal interest rate predictions. The 2-year gilt ended the day up by 23.7bps at 4.35%, according to data from MarketWatch, approaching the highs found durin...

To continue reading this article...

Join Investment Week for free

  • Unlimited access to real-time news, analysis and opinion from the investment industry, including the Sustainable Hub covering fund news from the ESG space
  • Get ahead of regulatory and technological changes affecting fund management
  • Important and breaking news stories selected by the editors delivered straight to your inbox each day
  • Weekly members-only newsletter with exclusive opinion pieces from leading industry experts
  • Be the first to hear about our extensive events schedule and awards programmes

Join now

 

Already an Investment Week
member?

Login

More on Bonds

US GSS bond issuances falls to lowest level since 2017

US GSS bond issuances falls to lowest level since 2017

Down 25% amid political turmoil

clock 13 May 2025 • 3 min read
Deep Dive: Private markets could be the future of 60/40 portfolios

Deep Dive: Private markets could be the future of 60/40 portfolios

Split between traditional and revamped model

Cristian Angeloni
clock 25 April 2025 • 5 min read
Pictet AM's Ermira Marika: Do not fear defaults in European credit

Pictet AM's Ermira Marika: Do not fear defaults in European credit

Risk misperceptions

Ermira Marika
clock 22 April 2025 • 4 min read
Trustpilot