Yield Frenzy

Yield Frenzy

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  • The United Kingdom successfully issued gilts worth £4 billion ($5.1 billion) at the highest interest rate in 16 years. This highlights the need for governments to provide attractive returns in order to attract investors, given the series of interest rate increases over the past year. According to Bloomberg data, the average yield on the 2025 bonds stood at 5.668%, the highest rate since a five-year issuance in June 2007.
  • Borrowing costs have experienced a significant surge following an exceptionally intense series of interest rate increases, as central banks strive to manage inflation. The United Kingdom has encountered notable challenges in curbing price pressures, with the core inflation measure surpassing 7%, marking the swiftest rate of increase in over three decades.

Why it matters

Despite the Bank of England implementing a series of interest rate increases totaling almost five percentage points since late 2021, market expectations suggest a 50% likelihood of the highest rate reaching 6.5% by March. This forecast implies that bond yields will continue to face downward pressure.


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