1) Recent Rates Movements
The gilts yield curve has exhibited mixed directional movements across the tenors, with the shape evolving differently depending on the time horizon considered.
- Past day: Yields fell across all maturities, with the 2Y declining by 2.52bps and the 30Y by 2.29bps. The spread change is (-2.29) - (-2.52) = +0.24bps, indicating a marginal steepening, as the short end fell slightly more than the long end.
- Past month: Yields rose across all tenors, with the 2Y up 8.58bps and the 30Y up 10.81bps. The spread change is (+10.81) - (+8.58) = +2.23bps, confirming a steepening move, as the long end rose more than the short end.
- Past year: Yields rose broadly, with the 2Y up 50.16bps and the 30Y up 36.60bps. The spread change is (+36.60) - (+50.16) = -13.56bps, signaling a flattening move, as the short end rose considerably more than the long end.
These shape shifts carry distinct economic signals. Over the past day and past month, the modest steepening moves suggest a slight divergence between near-term and longer-term rate expectations, though the magnitude in both cases remains limited. Over the past year, the more pronounced flattening — driven by a sharper rise in short-term yields relative to long-term yields — is consistent with tighter near-term monetary policy conditions and elevated short-term inflation expectations relative to longer-term expectations. The broad-based upward yield shift observed across all tenors over the past year also reflects a wider repricing of interest rate expectations across the entire curve, distinct from the more contained movements seen over the shorter past day and past month windows.