Expectations earlier in the year that the Bank of England (BoE) would make a flurry of interest rate cuts have not come to fruition, with pressures following the autumn Budget and the US election driving gilt yields higher.
The yield on 10-year gilts has risen to about 4.5%, about 40 basis points (bps) higher than a month ago, as UK government debt has a sell-off. That will have hurt investors who held longer-duration bonds and were hoping to achieve capital gains on rate cuts.
Higher-than-expected borrowing from the Labour government in the recent Budget and the prospect of sustained inflation under Donald Trump in the US have contributed to that picture.
