Overview

• Thirty-year UK gilt yields reached 5.61% on Monday, near a 27-year high, while the 10-year benchmark rose to about 4.74%.
• Traders link the jump to worries over government borrowing and stubborn inflation, with fewer rate cuts priced after the Bank Rate was trimmed to 4% on 7 August, and they are watching CPI on Wednesday and public finance data on Thursday.
• The moves are intensifying pressure on Chancellor Rachel Reeves, with economists saying higher yields could erode her roughly £9.9bn fiscal headroom before the Autumn Budget.
• Bank of England policymakers are reported to be considering a slower pace of quantitative tightening as yields climb.
• Structural shifts are also in focus, including reduced long-dated demand from closing defined-benefit pension funds and the Debt Management Office’s tilt toward shorter-dated issuance, while global government yields have also been rising with the UK standing out.