UK borrowing costs — which soared to a 16-year high in January as a global bond sell-off combined with concerns about the UK economy — have fallen significantly in recent weeks as hopes rise of deeper UK interest rate cuts.
A strong rally in gilts has lifted prices into positive territory for the year, taking the 10-year yield down 0.12 percentage points since January 1 to 4.45 per cent. Yields move inversely to prices.
Key to this has been a string of weaker economic data, including slower-than-expected inflation, raising the probability of a rate cut. Concerns over the growth threat from Donald Trump’s tariffs have intensified bets on deeper cuts, providing a tailwind to gilts, helped on by gains in US Treasuries.
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