Overview
- Bond markets sold off after renewed US–Iran hostilities pushed Brent crude toward $91 a barrel, which on Tuesday drove 10‑year gilt yields to about 5.1–5.2% and 30‑year yields to roughly 5.8–5.9%.
- The Office for National Statistics reported a surprise £1.8bn rise in July borrowing, and economists say recent yield moves could cut Chancellor John Healey’s fiscal headroom by about £6bn.
- Supply pressures make the UK especially exposed because the Debt Management Office planned roughly £303.7bn of gilt sales in the last financial year, and debt interest already ran near £109bn in 2025–26.
- Some market commentators and economists have urged the Bank of England to consider slowing its quantitative tightening programme to ease gilt‑yield pressure, though any change would need to weigh inflation risks.
- Higher yields are likely to lift mortgage and borrowing costs, depress commercial property values, and complicate policy choices for the government as it finalises spending and tax plans ahead of the Budget.