FX.co ★ UK 10-Year Gilt Yield Falls on Weak PMI and Fiscal Concerns

The yield on the United Kingdom's 10-year gilt decreased to 4.69%, a slight retreat from the recent high of 4.73% observed on Monday. This shift came as investors responded to lower-than-anticipated Purchasing Managers' Index (PMI) figures and ongoing fiscal uncertainties. The S&P Global PMI for September highlighted a noticeable deceleration in private-sector activity, with the services sector seeing slowed growth and manufacturing facing further contraction. Simultaneously, net borrowing by the public sector in August significantly surpassed predictions, amplifying concerns ahead of the upcoming Autumn Budget in November. Heightened global debt levels, which have recently propelled 30-year gilt yields to unprecedented heights, may further limit the government's capacity for additional fiscal expenditures. The Bank of England opted to hold interest rates steady last week, adopting a cautious approach, with market forecasts not anticipating a rate cut until 2026.