1) Recent Rates Movements
The UK gilts yield curve has exhibited distinct movement patterns across different time horizons, with varying degrees of steepening and flattening.
- Past day: The curve steepened by 1.95 basis points (30Y +2.56bps minus 2Y +0.61bps), with yields rising across all maturities but more pronounced at the long end.
- Past month: A steepening of 2.55 basis points occurred (30Y +5.67bps minus 2Y +3.12bps), despite the 5-year segment declining by 1.62 basis points while other tenors posted gains.
- Past year: The most dramatic steepening of 71.46 basis points was recorded (30Y +22.83bps minus 2Y -48.63bps), driven by significant short-end declines and long-end increases.
The consistent steepening across all periods reflects divergent expectations along the maturity spectrum, with economic implications varying by timeframe.
- Past day: The modest steepening suggests market positioning ahead of potential policy announcements or economic data releases.
- Past month: The steepening pattern indicates markets may be pricing in different trajectories for short-term policy rates versus long-term growth and inflation expectations.
- Past year: The substantial steepening reflects a fundamental repricing of the curve, with the 48.63 basis point decline in 2-year yields suggesting expectations of lower near-term rates, while the 22.83 basis point rise in 30-year yields indicates higher long-term inflation or growth expectations.