The UK sold £4 billion ($5.1 billion) of gilts at the highest yield in 16 years on Wednesday, underscoring the elevated returns governments must offer to lure investors after more than a year of interest-rate hikes.
(Bloomberg) — The UK sold £4 billion ($5.1 billion) of gilts at the highest yield in 16 years on Wednesday, underscoring the elevated returns governments must offer to lure investors after more than a year of interest-rate hikes.
The yield on the 2025 notes was 5.668%, the loftiest average rate on bonds since a five-year placement in June 2007, according to data compiled by Bloomberg.
There’s been a seismic shift higher in borrowing costs after one of the most aggressive rate-hiking cycles in history as central banks battle to get inflation under control. Price pressures have been particularly hard to temper in the UK, where the core measure remains above 7%, the fastest pace in more than 30 years.
The Bank of England has unleashed nearly five percentage points of hikes since late 2021. Still, markets are pricing a one-in-two chance of a peak rate of 6.5% by March, implying bond yields will remain under pressure.
Read more:
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