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

Almost all investors and wealth managers plan to increase high yield focus in next two years

Almost all investors and wealth managers plan to increase high yield focus in next two years

Stock market correction expected

Sorin Dojan
clock 07 July 2025 • 1 min read
Global ESG backlash has not eroded demand for UK green bonds

Global ESG backlash has not eroded demand for UK green bonds

This year's auctions oversubscribed

Sorin Dojan
clock 03 July 2025 • 4 min read
Federated Hermes launches Global Short Duration Bond fund just as asset class booms

Federated Hermes launches Global Short Duration Bond fund just as asset class booms

Responding to ‘increased investor demand’

Eve Maddock-Jones
clock 25 June 2025 • 2 min read
Trustpilot