1) Recent Rates Movements
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 -0.92bps (30Y fell -2.77bps vs 2Y fell -1.86bps), as yields declined across all maturities with longer-dated bonds showing marginally larger decreases. The past month delivered a pronounced steepening of +15.83bps (30Y rose +8.68bps vs 2Y fell -7.16bps), driven by short-end yields falling while long-end yields rose significantly. Over the past year, the curve demonstrated substantial steepening of +68.26bps (30Y rose +20.28bps vs 2Y fell -47.98bps), reflecting divergent movements with short-term rates declining sharply while long-term yields increased considerably.
- Past day: Modest flattening with parallel downward pressure across maturities
- Past month: Strong steepening as short rates fell while long rates rose
- Past year: Dramatic steepening with significant short-end decline and long-end rise
The steepening trends observed over longer timeframes suggest evolving market expectations regarding monetary policy and economic conditions. The substantial decline in short-term yields over both monthly and annual periods indicates expectations of lower policy rates, while rising long-term yields reflect concerns about longer-term inflation expectations or increased term premiums. This divergence between short and long-term rates is characteristic of periods when markets anticipate central bank easing in the near term while maintaining concerns about longer-term economic fundamentals. The recent daily flattening represents a temporary pause in this broader steepening trend, potentially reflecting short-term market positioning or technical factors affecting the curve dynamics.