UK 10Y Bond Yield Hits 15-week High

UK 10 Year Government Bond Yield increased to 4.62%, the highest since November 2025. Over the past 4 weeks, United Kingdom 10Y Bond Yield gained 6.13 basis points, and in the last 12 months, it decreased 0.71 basis points.

The UK 10-year gilt yield surged above 4.6%, reaching its highest since mid-October, and is poised for an over 40-basis-point weekly rise, the largest since September 2022, as investors assessed rising inflation risks tied to the escalating Middle East conflict. Heightened regional tensions have raised concerns over potential disruptions to global crude oil supplies, pushing energy prices higher and likely keeping inflation elevated across Europe. This has reduced the likelihood of a Bank of England rate cut, with UK money markets now pricing less than a 20% chance of a cut this month and UK rate futures showing less than a 50–50 chance of a single cut by the end of 2026. Earlier this week, the Office for Budget Responsibility revised the UK’s 2026 growth forecast down to 1.1% from 1.4%, even before accounting for potential energy shocks. Growth projections for 2027 and 2028 were raised to 1.6%, reflecting expectations for lower borrowing and more moderate inflation.

The UK 10-year gilt yield climbed back to around 4.4%, its highest level since February 12, as investor attention returned to inflation risks amid the escalating conflict in the Middle East, now entering its sixth day. The resulting surge in oil and gas prices has heightened global inflation concerns, prompting investors to scale back expectations for interest-rate cuts by the Bank of England. Markets now assign only about a 20% probability of a rate cut this month, and anticipate only a single 25-basis-point reduction in borrowing costs over the course of the year. Meanwhile, the Office for Budget Responsibility lowered its forecast for UK economic growth in 2026 to 1.1%, down from 1.4% projected in November, even before factoring in potential energy-price shocks. However, growth projections for 2027 and 2028 were revised upward to 1.6% in both years, alongside expectations for reduced government borrowing and more moderate inflation.