Persistent inflation and the prospect of further interest rate hikes have seen British debt reach levels not seen since last October, when a massive tax cut ordered by former prime minister Liz Truss sparked a crisis of confidence in the Kingdom’s economy.
This Thursday the ten-year British bond yield hit 4,379%, the highest since mid-October, while the two-year bond climbed to 4,540%, the highest since late September.
The Office for National Statistics (ONS) on Wednesday announced a decline in year-on-year inflation to 8.7% in April, compared with 10.1% in March, the first drop below 10% since August last year.
However, core inflation, a metric that excludes seasonal and volatile elements, rose to 6.8% from 6.2%, the highest since the late 1990s, and food inflation stood at 19.1%, compared with 19.2% in March. Which was at its peak in the past. 45 years.
“The strong rise in core inflation has fueled expectations of a rate hike by 100 basis points (from the current 4.5% to 5.5%) by the Bank of England, which has raised lending interest rates to its highest level since last October. Year ,” said Michael Hewson, analyst at CMC Markets.
“(UK) debt yields are approaching levels seen last September and October. (…) During that episode, there was a buyer of support in the form of the Bank of England” one of the main asset managers in the United Kingdom, Sonja Laud, director of investments at Legal & General, said in a statement today.
“At this juncture, we do not expect the Bank of England to reactivate its purchase programme,” said the board, which at the same time stressed that widespread “market failures” during the crisis resulted from the truce measures. They wanted to go without a record, like the Sterling Crash.
The British currency, which fell below US$1.10 US in September, was today exchanged at US$1.2324 and €1.1493.