UK government pays highest interest rate on 30-year bond since 1998

AI desk brief

UK 30-year borrowing costs jumped to 5.82% at Tuesday’s gilt sale, the highest since the DMO was created in 1998, as investors priced in a broader bond sell-off, higher inflation risk and rising public debt concerns. The move underscores tighter fiscal conditions and a more challenging backdrop for duration assets, with higher rates also likely to keep pressure on real yields if energy-driven inflation persists.

BoE Governor Andrew Bailey said the risks to inflation and interest rates are “on the upside” from energy prices, noting UK mortgage rates are already about 75bp higher since the Middle East conflict resumed. Brent was around $97/bbl, and MPC members remained split on the inflation outlook ahead of next week’s policy meeting.