Market Insights

The UK gilts yield curve has exhibited distinct movement patterns across different timeframes, with varying degrees of flattening observed. Over the past day, the curve experienced a flattening move with the spread change of +1.17bps (30Y: -2.05bps minus 2Y: -3.22bps), as yields declined across all maturities but short-end rates fell more significantly. The past month showed a steepening pattern with a spread change of +4.77bps (30Y: +2.69bps minus 2Y: -2.08bps), driven by rising medium to long-term yields while short-term rates declined. Over the past year, a pronounced steepening occurred with a spread change of +80.91bps (30Y: +10.40bps minus 2Y: -70.51bps), reflecting substantial short-end rate declines alongside modest long-end increases.

• Past day: Modest flattening as all yields declined, with short rates falling more than long rates
• Past month: Steepening driven by rising intermediate and long-term yields contrasting with falling short rates
• Past year: Significant steepening reflecting the divergent paths of monetary policy expectations and long-term economic outlook

The overall trend indicates evolving market expectations regarding monetary policy and economic conditions. The past year's dramatic steepening suggests markets have priced in substantial short-term rate cuts while maintaining relatively stable long-term inflation and growth expectations. The past month's continued steepening, albeit more moderate, reinforces this divergence between near-term policy easing expectations and longer-term economic fundamentals. These movements typically reflect changing perceptions of central bank policy paths, with the substantial decline in short-term yields indicating expectations of accommodative monetary policy, while the stability or modest increases in long-term yields suggest persistent concerns about structural inflation or fiscal sustainability.