LONDON, September 3, 2026, 09:25 (BST) —
- At 08:35 BST, the yield on the 30-year gilt slipped to 5.840%.
- The yield on the 30-year was 124.6 basis points higher than that of the two-year note.
- The 10-year yield was 20 basis points higher than the July upper-quartile year-end survey projection.
- The Bank of England will convene on September 17, with the British budget set for October 28.
UK government bond yields edged lower on Thursday morning, with long-term borrowing rates still hovering close to historic peaks. The 30-year gilt yield stood at 5.840% as of 08:35 BST, slipping 2.5 basis points Investing.com.
The curve stayed notably steep, with the 30-year yield positioned 124.6 basis points higher than the two-year rate at 4.5942%.
The spread serves as an indicator for investors. It points to ongoing fiscal supply and inflation uncertainty, maintaining a significant duration premium.
UK gilt yield curve remains steep
Benchmark yield, percent
The yield on the 10-year reached 5.2031% as of 09:02 BST. On Tuesday, it climbed to 5.2554%, marking its highest point since June 2008 Reuters.
Earlier losses were triggered by oil and widening global deficits. Higher energy costs and fresh tensions in the Middle East have sparked new concerns over inflation Bloomberg.
Sterling was unable to benefit from increased yields, falling to $1.35395 on Tuesday, around 1% under its latest six-month peak Reuters.
Yield premium over the 3.75% Bank Rate
Basis points by maturity
The Bank Rate stays at 3.75%. The central bank noted that rising energy expenses might push inflation higher again later this year Bank of England.
Following Tuesday’s sell-off, markets anticipated two rate hikes by February. Mohit Kumar, a European strategist, described Britain as “the weakest link in the deficit story” Bloomberg.
Fiscal space has diminished. According to economists referenced by The Guardian, the £26 billion fiscal cushion may drop to less than £14 billion by the time of the October budget.
Current 10-year yield is above July’s forecast range
Percent; Bank of England market-participant survey for end-December 2026
The current yield is 20.3 basis points above the survey’s 75th percentile and 40.3 basis points above its median. Survey: 72 responses. Sources: Bank of England; current quote at 09:02 BST.The present 10-year yield stands 40.3 basis points higher than the survey’s year-end median and is above the survey’s 5.00% upper quartile.
Supply pressures are set to persist past this week. According to the OBR, gross gilt issuance will average £268 billion, representing 7.9% of GDP, through 2030-31 OBR.
Private investors are required to purchase gilts amounting to 4.9% of GDP each year. This is nearly double the annual rate seen from 2000-01 through 2022-23.
Issuing less debt today reduces immediate coupon expenses, but it will heighten future refinancing risks, the OBR stated.
Upcoming tests approach. The Bank of England will set interest rates on September 17, ahead of the budget scheduled for October 28.
Risks: A drop in oil prices or more restrictive fiscal policy may level the curve. If inflation picks up again or fiscal calculations deteriorate, long-term yields could rise once more.
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