1) Recent Rates Movements
The gilts yield curve has exhibited a consistent flattening trend across all three periods under review, driven by long-end yields declining or rising less than short-end yields.
- Past day: Spread Change = (-8.19) - (1.64) = -9.83bps, indicating a flattening move. The 30Y yield fell by approximately 8.19bps while the 2Y yield rose marginally by 1.64bps, narrowing the long-short spread.
- Past month: Spread Change = (33.07) - (35.26) = -2.19bps, indicating a modest flattening move. Both ends of the curve rose substantially, with the 2Y yield increasing by 35.26bps slightly outpacing the 30Y yield's 33.07bps gain.
- Past year: Spread Change = (32.14) - (69.35) = -37.21bps, indicating a pronounced flattening move. The 2Y yield surged by 69.35bps, more than double the 30Y yield's 32.14bps increase, significantly compressing the spread.
This sustained flattening pattern, particularly pronounced over the past year, reflects a relative repricing of short-term rates higher relative to long-term rates. Such dynamics are typically associated with monetary policy tightening expectations at the short end of the curve, where 2Y yields are more sensitive to central bank rate paths. The past month's parallel-like upward shift, with only slight flattening, suggests broad-based upward yield pressure across all tenors, potentially linked to shifting inflation expectations or fiscal outlook. The past day's flattening, driven by long-end yield declines amid stable short-end yields, indicates a more immediate repricing of long-term growth or inflation expectations rather than shifts in near-term policy rates. Collectively, these trends point to a curve that has moved from a steeper configuration a year ago toward a flatter shape today, with short-term rates rising faster than long-term rates over the year, consistent with tightening financial conditions at the shorter end of the curve.