1) Recent Rates Movements
The UK gilts yield curve has experienced notable movements across different timeframes, with varying directional changes and curve shape dynamics.
- Past day: The curve exhibited a flattening move with a spread change of +0.7bps (30Y declined -3.47bps vs 2Y declined -4.17bps), as yields fell across all maturities with short-end rates declining more than long-end rates.
- Past month: A steepening occurred with a spread change of -4.37bps (30Y fell -11.37bps vs 2Y fell -6.99bps), driven by more pronounced declines in longer-dated gilts compared to shorter maturities.
- Past year: The curve demonstrated significant steepening with a spread change of +94.0bps (30Y rose +22.75bps vs 2Y fell -71.25bps), reflecting sharply contrasting movements between short and long-end yields.
These curve dynamics reflect distinct economic environments and policy expectations across the analyzed periods.
- Past day: The modest flattening alongside broad-based yield declines suggests short-term policy rate expectations may have shifted more dovishly than long-term growth or inflation expectations.
- Past month: The steepening pattern, with long-end yields falling more substantially, indicates potential easing in longer-term inflation expectations or growth concerns outweighing near-term policy considerations.
- Past year: The dramatic steepening reflects a fundamental repricing, with short-end yields declining significantly (likely reflecting lower policy rate expectations) while long-end yields rose substantially, suggesting higher long-term inflation expectations or increased term premiums demanded by investors for duration risk.