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UK’s Long-Term Borrowing Costs Demonstrate Growth

On Tuesday, January 7, in the United Kingdom, the cost of borrowing showed an increase after the auction of 30-year Treasury gilts brought yields on the long-term bonds reached the highest level in almost three decades.

UK’s Long-Term Borrowing Costs Demonstrate Growth

The yield on 30-year Gilt, a UK government bond, rose by 3 basis points to 5,212%. This figure is the highest since the late 1990s.

The United Kingdom Debt Management Office auctioned off £2.25 billion ($2.83 billion) worth of Gilts with a 30-year maturity, with an initial yield offer of 4.375%.

The yield on 20-year gilts increased by 3 basis points to 5.153%.

Yields on gilts with shorter maturity terms also showed an upward dynamic on Tuesday. The yield on 10-year UK gilts increased by 3 basis points to 4.641%. Yields on 2-year and 5-year gilts were slightly higher.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said uncertainty both at home and abroad was a factor affecting the UK bond market. In this context, it was noted that traders were worried that the intentions of Donald Trump, who won the United States presidential election in November and will return to the White House this month, to increase tariffs on imported goods could trigger an acceleration of inflation in the US and beyond.

It is worth noting that the economic system of the United Kingdom is currently going through difficult times. In October, the UK economy unexpectedly contracted by 0.1%. Also, inflation is above the target of the Bank of England. In November, the corresponding indicator rose to 2.6%.

Serhii Mikhailov

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Serhii’s track record of study and work spans six years at the Faculty of Philology and eight years in the media, during which he has developed a deep understanding of various aspects of the industry and honed his writing skills; his areas of expertise include fintech, payments, cryptocurrency, and financial services, and he is constantly keeping a close eye on the latest developments and innovations in these fields, as he believes that they will have a significant impact on the future direction of the economy as a whole.