Gilt Yields Follow US Treasuries Higher Before Jobs Data

UK 10-year gilt yields rose to 4.8%, hitting a one-week high as they followed US Treasury yields higher, with investors awaiting US jobs data later in the day. Markets also digested remarks from central bankers at the ECB’s Sintra Forum. Bank of England Governor Andrew Bailey maintained a dovish tone, citing a softening UK economy but ruling out near-term rate cuts due to lingering inflation risks. Meanwhile, Fed Chair Kevin Warsh noted that inflation expectations have eased recently, though he reaffirmed the Fed’s commitment to its 2% target. UK political shifts are unlikely to impact sterling until late July, when Andy Burnham is expected to take office as Prime Minister. Elsewhere, markets welcomed progress in indirect US-Iran talks, with Qatar set to schedule the next meeting soon, while oil prices continued to decline as more shipments moved through the Strait of Hormuz.

UK 10-year gilt yields rose to 4.8%, extending gains from last week’s two-month lows, as investors parsed remarks from global central bankers at the ECB’s Sintra Forum. Bank of England Governor Andrew Bailey reiterated his dovish stance, telling CNBC that UK policymakers see a softening economy and that May’s rate hold at 3.75% reflected this view. He ruled out near-term cuts, citing persistent inflation risks, though he noted encouragement from falling energy prices. Bailey also stressed the BoE won’t rush to react to rising oil prices, as inflation remains on track to hit 2%, albeit later than hoped. Gilt yields also tracked US Treasuries higher after Fed Chair Kevin Warsh offered no new rate guidance, while investors bet on further Fed hikes this year amid solid labor data. Elsewhere, bond markets weighed the odds of Ed Miliband becoming Chancellor over Wes Streeting, with fiscal concerns easing after Andy Burnham, the PM frontrunner, pledged fiscal discipline.

UK 10-year gilt yields climbed toward 4.8%, rebounding from two-month lows and tracking a surprise rise in US Treasury yields. This followed the latest JOLTS report, which showed job openings at a two-year high, while analysts expect another strong June non-farm payrolls report, reinforcing bets that the Federal Reserve will raise interest rates this year. In the UK, investors assessed the growing likelihood of Energy Secretary Ed Miliband becoming the next Chancellor over centrist Wes Streeting. Concerns about fiscal policy under Andy Burnham, the frontrunner to succeed as Prime Minister, eased after his fiscal discipline pledge. Meanwhile, attention remained on the ECB’s Sintra Forum for economic and policy insights. Bank of England Governor Andrew Bailey reiterated that the BoE is not rushing to respond to rising oil prices, with inflation still on track to return to the 2% target, albeit later than desired.