The UK’s 30‑year gilt yields spiked to their highest level since 1998, but analysts say the rise is part of a global debt sell‑off rather than a reaction to domestic policy. Rising energy costs from the Iran conflict, a sharp yen decline, and a lack of confidence in US Treasury moves have pushed investors to pull out of government bonds worldwide. Meanwhile, the early stages of the AI boom are driving massive new borrowing, adding uncertainty to long‑term returns. The UK’s political leadership, including PM Andy Burnham, has yet to issue a decisive response that could reassure markets.
Fair to say the current sell-off is international, but the PM has said little yet to make investors rethink the UK’s statusIt’s too soon to say the bond markets have turned on Andy Burnham. Tuesday’s spike in gilt yields, taking the UK’s 30-year borrowing costs to their highest level since 1998, was part of an international sell-off of government debt.The main contributors are well known. The Iran war, by increasing the cost of energy, has overturned the comforting start-of-the-year thesis of falling global inflation and interest rates. A plunging Japanese yen has kicked away another assumed source of financial stability. The US treasury secretary, Scott Bessent, hasn’t calmed nerves with his solo, and so far futile, attempt to bring down US yields. Meanwhile, the early stage of the AI revolution is an exercise in issuing squillions of debt before long-term returns on capital can possibly be assessed meaningfully. Continue reading...
