1) Recent Rates Movements
The gilts yield curve has exhibited varying dynamics across different timeframes, with notable shifts in shape driven by differential movements between short and long-dated maturities.
- Past day: The spread change was 12.57 - 14.52 = -1.95bps, indicating a modest flattening. Yields rose across all tenors, with the 2Y increasing by 14.52bps and the 30Y by 12.57bps, reflecting a broadly parallel upward shift with a slight compression at the long end.
- Past month: The spread change was 9.16 - (-10.73) = 19.89bps, signaling a clear steepening. The 2Y yield fell by 10.73bps while the 30Y yield rose by 9.16bps, widening the differential between short and long maturities.
- Past year: The spread change was 31.38 - 49.27 = -17.89bps, confirming a flattening trend. Both ends of the curve rose substantially, but the 2Y's 49.27bps increase outpaced the 30Y's 31.38bps rise, narrowing the spread over the period.
These verified shape changes carry distinct economic implications. The past day's marginal flattening, occurring alongside a broad-based yield increase, suggests a uniform repricing across the curve rather than a shift in relative expectations. The past month's steepening, driven by falling short-term yields against rising long-term yields, is consistent with markets pricing in near-term monetary policy easing while maintaining or increasing longer-term inflation or growth expectations. The past year's flattening, resulting from a larger rise in short-term yields relative to long-term yields, aligns with a period of monetary tightening where short rates adjusted more significantly than long-term expectations for growth and inflation.