Market insights

The gilts yield curve has exhibited consistent flattening across all observed periods, as short-term yields have risen more sharply than long-term yields.

• Past day: The 30Y yield rose by 1.3bps while the 2Y yield rose by 5.6bps, producing a Spread Change of -4.3bps, confirming a flattening move, with the 2Y leading the increase in yields across the curve.
• Past month: The 30Y yield increased by 18.1bps against a 37.3bps rise in the 2Y yield, giving a Spread Change of -19.2bps, a more pronounced flattening than the daily move, with short-term rates climbing substantially faster than long-term rates.
• Past year: The 30Y yield gained 49.9bps versus a 92.0bps increase in the 2Y yield, resulting in a Spread Change of -42.1bps, the most significant flattening observed, underscoring a sustained repricing of the front end relative to the long end.

This persistent flattening pattern across the past day, past month, and past year suggests markets have been pricing in higher near-term interest rate expectations relative to long-term rates. Short-term yields are typically more sensitive to central bank policy rate expectations, while long-term yields reflect expectations for growth and inflation over an extended horizon. The widening gap between short and long-term yield increases, particularly evident over the past year, indicates that monetary policy expectations have shifted more significantly than long-term growth or inflation expectations. This consistent directional trend across all three timeframes reflects a structural repricing of the front end of the curve relative to longer maturities.