UK 10Y Bond Yield Hits 5-week Low

UK 10-year gilt yields fell below 5.3%, reaching their lowest level in over a month, a day after Finance Minister John Healey unveiled a cautious budget aimed at supporting households facing global economic pressures. Healey reaffirmed the government’s commitment to its fiscal rules, announcing tax increases on banks, gambling, savings, and landlords, alongside tighter VAT rules for online marketplaces and measures to cushion households from rising energy bills. He also said the government would use part of its fiscal buffer, now reduced to £15 billion from a previous estimate of £24 billion, to meet its main fiscal target while maintaining efforts to repair public finances despite the economic fallout from the Iran conflict. The budget did little to alter market expectations for the Bank of England’s policy meeting next week. Money markets are fully pricing in a rate hike on November 5, with a second increase expected by February.

UK 10 Year Government Bond Yield decreased to 5.29%, the lowest since September 2026. Over the past 4 weeks, United Kingdom 10Y Bond Yield lost 13.27 basis points, and in the last 12 months, it increased 85.84 basis points.

UK 10-year gilt yields fell toward 5.3%, their lowest in over a month, as UK Chancellor John Healey delivered his first budget, reaffirming fiscal discipline and outlining a debt-sale plan in line with forecasts. Healey reaffirmed his commitment to the government’s fiscal rules, with the Office for Budget Responsibility (OBR) estimating fiscal headroom at £15 billion for 2029–30, in line with expectations. Key measures include energy bill relief, lower-than-expected bank tax increases, tariff suspensions on more than 100 supermarket products and a 3.9% increase in minimum wages. The budget also allocates an additional £20.4 billion to the National Wealth Fund and the British Business Bank to support investment and 140,000 jobs. Meanwhile, the OBR cut its 2027 GDP growth forecast to 1% from 1.6%, citing the economic impact of the Iran war, while raising its 2026 projection to 1.2% from 1.1%. Borrowing and public debt forecasts were also revised higher across the outlook period.