Bond markets unnerved by scale of extra borrowing in chancellor Rachel Reeves’ Budget
A sell-off in the gilt market intensified on Thursday, as investor worries over the additional borrowing set out in chancellor Rachel Reeves’ Budget pushed UK borrowing costs to their highest level of the year. The yield on the 10-year gilt rose 0.17 percentage points to 4.52 per cent, while the two-year yield climbed 0.22 percentage points to 4.53 per cent. The pound fell 0.8 per cent to $1.286 against the US dollar, its lowest in more than two months.
” Ben Nicholl, a senior fund manager at Royal London Asset Management, said the scale of the market move was partly down to bullish gilt investors rushing to sell their holdings, as well as a view that Reeves may further beef up gilt issuance in the near future. “There is a fear, I think, that Labour will have to come back to the bond market in April, to increase borrowing and raise more taxes,” he said. The surge in yields takes UK 10-year borrowing costs close to the 4.
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