UK 30-Year Gilt Yield Reaches Highest Level Since May 1998

Yields on UK government bonds rose sharply on Tuesday, with the 30-year gilt yield climbing to 5.79 percent. Market data showed this as the highest level since May 1998. The 10-year gilt yield increased to 5.122 percent.

Inflation expectations over the next 10 years rose to 2.5 percent, the highest reading since 2023, according to breakeven rates. Investors now price in at least two Bank of England interest rate increases in coming months after the central bank left rates unchanged at 3.75 percent the prior week.

A chief investment strategist at Wealth Club linked the move to energy prices and developments in the Middle East. “UK gilt yields have edged even higher as painful energy prices and the tense Middle East situation mean multiple interest rate hikes look likely,” said Susannah Streeter.

The same strategist noted that higher borrowing costs reduce the Treasury’s fiscal room because more revenue goes toward debt interest payments.

The UK now carries the highest government borrowing costs in the G7, with 10-, 20-, and 30-year yields above 5 percent. Elevated gilt yields push up mortgage rates because many fixed-rate deals track gilt movements, and some lenders have already withdrawn lower-rate offers. Housebuilder shares fell in early trading.

Sterling traded at 1.353 against the dollar. The yield increases, which move inversely to bond prices, require the government to pay higher returns to attract buyers of new debt.