LONDON – British borrowing costs fell sharply on Wednesday after Britain and the United States reported lower-than-expected consumer inflation data
The output is 10-Year UK Government Bond It was down 16 basis points at 4.727% at 4pm in London, which would be the first single-day decline since December 31. Yields hit their highest level since 2008.
The rate of return is 2 years UK government bonds, known as UK government bonds, fell 15 basis points to 4.45%. The 30-year Treasury yield is down 15 basis points from its 27-year high.
Inflation data released in the United Kingdom showed that inflation increased at an annual rate of 2.5% in December, slightly lower than the 2.6% forecast by economists polled by Reuters, and investors cheered. The closely watched service sector inflation rate fell to 4.4% from 5%, the lowest level since March 2022.
The news both reinforced expectations for a rate cut by the Bank of England in February and was seen as a much-needed glimmer of good news for finance minister Rachel Reeves.
Reeves is grappling with a stagnant economy and appears to be at risk of violating self-imposed fiscal rules that require all daily government spending to be funded entirely by revenue, with the goal of lowering the national debt-to-gross domestic product ratio. . UK monthly economic growth data for November will be released on Thursday.
Bond markets largely unaffected auction The release of the 2034 bonds in mid-morning UK time showed interest in UK bonds remained strong despite recent volatility in bond markets, but demand was lower than last year.
However, after the release of the U.S. Consumer Price Index, yields fell at an accelerated pace, easing concerns about a rebound in inflation and driving U.S. government bond yields sharply lower. The overall U.S. consumer price index (CPI) was in line with the annual forecast, but core inflation excluding food and energy was slightly lower than expected.
U.S. Treasuries also experienced a selloff in 2025 as traders braced for cautious interest rate cuts by the Federal Reserve this year.
Gabriella Dickens, G7 economist at AXA Investment Managers, warned that the fall in headline UK inflation could be short-lived as the drag on energy prices continues to ease.
Dickens added: “We do not think this means there is an inherent inflation problem in the UK, as markets appear to have been concerned about this issue in recent months.”
“We see increasing risks of inflation running below target over the medium term and will therefore continue to focus on near-term price pressures this year.”
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