UK 10-Year Gilt Yield Hits 19-Year High at 5.41 Percent
The UK 10-year gilt yield reached 5.41 percent on Tuesday, marking a 19-year peak. This rise pressured the FTSE 100, which closed down 0.4 percent at 10,658.13 points.
The 10-year UK gilt yield climbed to 5.41 percent on Tuesday. This level represents a 19-year high, up from 5.38 percent on Monday. The FTSE 100 index fell 39.44 points to close at 10,658.13. The index traded as low as 10,586.39 during the session.
Investors reacted to persistent inflation concerns and high energy costs. Brent crude oil stood at 108.48 dollars per barrel. The US 10-year Treasury yield hit 5.01 percent, near its 19-year peak of 5.02 percent. The US 30-year Treasury yield reached 5.37 percent.
Oil prices drive inflation concerns
Geopolitical tensions in the US-Iran conflict kept oil prices elevated. Analysts noted that high energy costs are embedding into the economy. Companies face pressure to raise prices across a wide range of goods. This dynamic fuels fears of sticky inflation.
Morgan Stanley updated its outlook for US interest rates. The bank now expects a quarter-point rate increase in the near term. It also predicts a similar rise in December. This shift contradicts their earlier forecast of a hold for the year. The Fed is set to meet on Wednesday.
UK labor market shows cooling signs
UK unemployment held steady at 4.9 percent in the three months to July. This figure matched the previous quarter and beat consensus expectations of 5.0 percent. However, payroll data revealed a weaker underlying trend. Payrolled employee numbers dropped by 101,000 year-on-year in July.
An early estimate for August showed further weakness. Payrolls declined by 145,000 annually, a 0.5 percent drop. Average earnings growth cooled to 3.9 percent from 4.2 percent. These indicators suggest the labor market is slowing despite stable headline unemployment.
Global equities face broad selling
European stocks mirrored the UK decline. The CAC 40 in Paris fell 0.3 percent. The DAX 40 in Frankfurt dropped 0.2 percent. US markets also closed lower. The Dow Jones Industrial Average fell 0.9 percent during the London trading session.
The S&P 500 index declined 0.5 percent. The Nasdaq Composite dropped 0.7 percent. These moves reflect a risk-off sentiment across major global markets. The Bank of England decision is scheduled for Thursday. Market expectations currently favor a cautious hold.
