1) Recent Rates Movements
The UK gilts yield curve has experienced significant movements across different timeframes, with varying directional changes and curve shape dynamics.
- Past day: The curve experienced a flattening move with spread change of -1.33bps (30Y declined -2.04bps vs 2Y declined -0.71bps), as yields fell across all maturities with longer-dated bonds showing larger declines.
- Past month: A pronounced steepening occurred with spread change of +19.11bps (30Y rose +14.74bps vs 2Y fell -4.37bps), driven by contrasting movements where short-end yields declined while long-end yields rose substantially.
- Past year: The curve demonstrated dramatic steepening with spread change of +132.03bps (30Y surged +75.94bps vs 2Y plummeted -56.10bps), reflecting divergent performance across the maturity spectrum.
The overall trend reveals a consistent steepening bias over longer timeframes, suggesting evolving market expectations around monetary policy and economic conditions.
- Past day: The flattening move indicates temporary risk-off sentiment or expectations of policy accommodation, with investors seeking safety in longer-duration assets.
- Past month: The steepening reflects potential concerns about longer-term inflation expectations or fiscal sustainability, as longer-dated yields rose while short-end rates remained anchored by near-term policy expectations.
- Past year: The substantial steepening suggests markets have repriced expectations around the Bank of England's policy trajectory, with short-end yields falling significantly while long-end yields rose, indicating divergent views on near-term versus long-term economic prospects and inflation dynamics.