Market insights

The gilts yield curve has exhibited a consistent flattening pattern across all three periods, driven by short-end yields rising faster than long-end yields.

• Past day: The 2Y yield rose by 13.82bps while the 30Y yield increased by only 2.13bps, producing a Spread Change of -11.69bps (2.13 - 13.82), confirming a flattening move.
• Past month: The 2Y yield climbed 28.27bps against a 14.60bps rise in the 30Y yield, yielding a Spread Change of -13.67bps (14.60 - 28.27), again indicating flattening.
• Past year: The most pronounced move occurred here, with the 2Y yield up 70.52bps versus a 36.00bps increase in the 30Y yield, resulting in a Spread Change of -34.52bps (36.00 - 70.52), reflecting substantial flattening.

This sustained bear flattening—characterized by rising yields across all tenors but with short-dated yields increasing more sharply—suggests the market has been pricing in tighter near-term monetary policy conditions relative to long-term expectations. The compression of the 2Y-30Y spread over the past year is particularly notable, indicating that short-term interest rate expectations have adjusted upward more significantly than long-term growth or inflation expectations embedded in longer maturities. The continuation of this trend into the past month and past day, albeit at a more moderate pace, points to persistent repricing at the front end of the curve relative to the back end, consistent with market participants adjusting expectations for the near-term policy rate path more than long-run economic conditions.