FX.co ★ UK-10 Year Gilt Yield Inches Up

The yield on the UK's 10-year government bond increased to 4.56% on Wednesday, following a significant government spending review that highlighted fiscal limitations despite mounting economic pressures. Chancellor Rachel Reeves unveiled a plan to allocate over £2 trillion by 2030, with departmental budgets anticipated to grow by 2.3% annually in real terms. Initially, yields surged by 7 basis points but later decreased after US inflation data came in weaker than expected, leading to a boost in global bond markets. Nonetheless, UK gilts lagged behind as markets absorbed the probable need for future tax hikes to finance the spending, exerting upward pressure on yields. Meanwhile, the Bank of England is anticipated to maintain interest rates next week, with market projections indicating a 90% likelihood. Additionally, global sentiment improved following the announcement of a draft trade agreement between the US and China after two days of negotiations in London.