Market insights

Analyzing the gilts yield curve using the spread change framework (30Y minus 2Y movement):

• Past day: 2Y fell -13.0bps while 30Y fell -5.6bps, giving a spread change of +7.4bps, indicating a steepening move as short-end yields declined faster than long-end yields.
• Past month: 2Y rose +38.2bps versus 30Y's +8.0bps, producing a spread change of -30.2bps, confirming a flattening move as short-term rates rose substantially more than long-term rates.
• Past year: 2Y increased +81.2bps against 30Y's +43.7bps, yielding a spread change of -37.5bps, also a flattening move, with intermediate tenors (5Y, 10Y, 20Y) showing a consistent gradient of declining increases along the curve.

These calculated moves point to a curve that has flattened significantly over both the past month and past year, with short-end yields rising more sharply than long-end yields—consistent with tighter monetary policy conditions being priced into the front end of the curve. The past day's steepening move, driven by a broad-based yield decline led by the short end, suggests a shift in near-term rate expectations rather than a reversal of the longer-term flattening trend. Elevated yield levels across all tenors relative to a year ago reflect sustained upward pressure on interest rate expectations, while the persistent flattening bias indicates the market continues to price a narrower differential between short- and long-term borrowing costs.