Overview
- The sell‑off on Tuesday pushed 30‑year gilt yields to about 5.89% and 10‑year yields above 5.2%, levels not seen for roughly 28–30 years.
- Markets say the immediate drivers were higher oil prices and US‑Iran tensions that revived inflation worries and expectations of further Fed tightening.
- Domestic factors added pressure as well, with large planned gilt sales of £303.7bn and political uncertainty increasing the premium investors demand to hold UK debt.
- Analysts estimate the rise could knock up to about £6bn off Chancellor John Healey’s fiscal headroom and will raise the government’s debt interest burden on top of roughly £109bn paid in 2025–26.
- Higher gilt yields are already feeding through to mortgage and corporate borrowing costs and could weaken housing and commercial property values, leaving the Bank of England and the Treasury to consider slowing quantitative tightening or altering fiscal plans before the October 28 Budget.