FX.co ★ UK Gilt Yields Rise on Fiscal Concerns, Oil Surge

The UK 10-year gilt yield climbed toward 5.1% on Thursday, its highest level since May 20, after Finance Minister John Healey warned about the rising cost of doing business and ongoing cost-of-living pressures. The 30-year gilt yield, which is especially sensitive to fiscal risk, also advanced to 5.78%, its highest since May 19.

Earlier in the day, Prime Minister Andy Burnham announced a 20% cut in business rates for pubs, clubs, and live music venues from April, the third set of support measures for businesses and households unveiled in as many days. He simultaneously reaffirmed his commitment to fiscal discipline.

Yields were further supported by higher oil prices, which rose to near two-month highs amid escalating tensions in the Middle East, stoking inflation concerns. Money markets now almost fully price in two quarter-point interest rate increases by the Bank of England before year-end.