1) Recent Rates Movements
The UK gilts yield curve has exhibited varying shape dynamics across the periods analyzed, with spread changes calculated as the differential between long-end (30Y) and short-end (2Y) movements.
- Past day: The 30Y yield fell by 3.01bps while the 2Y yield declined by 0.42bps, giving a Spread Change of -2.59bps. This indicates a flattening move, with yields falling across all tenors but more pronounced at the long end, as reflected in the 20Y (-3.05bps) and 10Y (-2.60bps) declines.
- Past month: The 30Y yield decreased by 0.82bps against a larger 2Y decline of 8.33bps, producing a Spread Change of +7.52bps. This constitutes a steepening move, with short-term yields falling considerably faster than long-term yields.
- Past year: The 30Y yield rose by 26.73bps while the 2Y yield increased by 40.57bps, resulting in a Spread Change of -13.84bps. This represents a flattening move over the longer horizon, despite yields rising across the entire curve.
These verified shape changes carry distinct economic implications. The past year's flattening, driven by short-end yields rising faster than long-end yields, is consistent with monetary policy tightening or expectations thereof, as short-term rates are more directly influenced by central bank policy rates. The past month's steepening, conversely, suggests a partial reversal, with short-term yields declining more sharply, potentially reflecting shifting expectations around near-term policy rates relative to long-term growth or inflation expectations. The past day's modest flattening, occurring alongside broad-based yield declines, indicates a continuation of long-end yields adjusting more than short-end yields within a single trading session.