- UK long-term borrowing costs hit 6% for the first time since 1998
- 30-year gilt yields rose amid inflation and rising government debt concerns
- US 10-year Treasury yields reached highest level since 2002
The UK's long-term borrowing costs hit 6% for the first time in almost three decades as concerns about entrenched inflation and mounting government debt burdens lifted yields globally.
The rate on 30-year gilts rose six basis points to 6.01%, the highest since March 1998. The last time a bond with that maturity from a Group-of-Seven nation touched that level was in 2012, when Italy's notes were falling during the European debt crisis.
On Thursday, the rate on US 10-year Treasuries also hit the highest since 2002.
The UK's debt is under pressure as climbing oil prices raise the risk that the Bank of England and other developed-market central banks will need to aggressively tighten policy to tame inflation. That's intensifying pressure on the nation's public finances just as Prime Minister Andy Burnham and Chancellor of the Exchequer John Healey prepare to deliver their first budget on Oct. 28.
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“Higher oil prices, stronger European inflation prints and the continued selloff in global duration” have all weighed on sentiment towards UK government bonds, said Evelyne Gomez-Liechti, multi asset strategist at Mizuho International Plc.
The swaps market is now pricing four rate hikes by the Bank of England by the end of next year, and a 70% chance of a fifth.
The UK's debt servicing costs are second only to its spending on health, government data show, and the Office for Budget Responsibility forecasts that figure will keep rising in coming years.
Elsewhere, US 10-year yields were up four basis points at 5.33%. German 10-year yields rose five basis points to 3.64% while French 10-year yields rose nine basis points to 4.95%. That widened the extra yield investors demand to hold French debt relative to Germany to more than 130 basis points.
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
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