Newsflash: UK government borrowing costs have jumped at the start of trading, as the bond market sell-off continues.
The yield, or interest rate, on UK 10-year bonds jumped by 4 basis points (0.04 of a percentage point) to 5.268%. That’s the highest since June 2008 (Reuters reports).
30-year UK bond yields also jumped 5bps to almost 5.89%, close to the highs seen yesterday.
Yields rise when bond prices fall, and are an indication of a country’s borrowing costs.
Although these are relatively small moves, they intensify the pressure on Andy Burnham’s government, eroding the amount of ‘fiscal headroom’ available to chancellor John Healey ahead of the autumn budget.
Joel Kruger, market strategist at LMAX Group, says the jump in the oil price today is driving bond yields higher:
double quotation mark“The dominant theme as markets open is the renewed escalation between the US and Iran, with attacks on Iranian military and tanker targets raising concerns over further disruption in the Strait of Hormuz.
Oil has extended to a six-week high, amplifying inflation concerns and driving another sharp rise in global bond yields
