1) Recent Rates Movements
The UK gilts yield curve experienced significant movements across all observed periods, with yields declining throughout the maturity spectrum. Over the past day, the curve exhibited a flattening move with the spread change of -3.40 bps (30Y: -4.30 bps minus 2Y: -0.90 bps), as longer-dated yields fell more sharply than shorter maturities. The past month showed a steepening pattern with a spread change of +2.07 bps (30Y: -8.93 bps minus 2Y: -10.97 bps), despite all yields declining, as short-end rates fell more aggressively. Over the past year, the curve demonstrated pronounced steepening with a spread change of +58.36 bps (30Y: -20.55 bps minus 2Y: -78.91 bps), reflecting the most dramatic reshaping as short-term yields collapsed significantly more than long-term rates.
The contrasting curve dynamics across these timeframes reflect evolving market conditions and monetary policy expectations. The recent daily flattening suggests growing concerns about longer-term economic prospects, while the monthly and annual steepening patterns indicate substantial shifts in short-term interest rate expectations, likely driven by central bank policy adjustments. The magnitude of yield declines, particularly the 78.91 bps drop in 2-year yields over the past year, points to significant easing in monetary policy stance and potentially weaker near-term growth expectations. The relatively smaller declines in longer maturities suggest that long-term inflation expectations and growth prospects have remained more stable compared to short-term rate expectations.