UK 30-year bond yield hits 6%, highest since 1998
Another bout of turmoil in the bond markets is driving up government borrowing costs across the world, and the UK is in the firing line.
Bond prices are falling, which pushes up the yield – or rate of return – on the debt.
And just a moment ago, the yield on Britain’s 30-year gilts hit 6% for the first time since 1998.
The yield on shorter-dated UK bonds are also rising, which will drive up London’s borrowing costs and add to the pressure on chancellor John Healey ahead of the budget later this month.
The bond sell-off is being driven by fears of high inflation, as the Middle East conflict continues to restrict oil supplies from the region.
Last night, US 10-year Treasury yields hit their highest level since 2002, and earlier today Japan’s 10-year bond yield rose towards the 30-year high set last month.
US bonds weakened despite a lower than expected US inflation reading yesterday, which could have calmed investors’ nerves.
But instead, traders remain anxious that the US Federal Reserve will continue to raise interest rates to fight inflation.
Axel Rudolph, chief technical analyst at investing and trading platform IG, explains:
XTB: The drivers of the global bond sell-off
Kathleen Brooks, research director at XTB, has warned that the bond market sell off is gathering pace today.
She cites several factors, including concerns over US government spending and the rising oil price:
Italy’s 10-year government bond yields has just touched its highest level since November 2023 at 4.7232%. That’s a rise of 10 bps (or 0.1 of a percentage point) today.
Stock markets hit by 'carnage in the bond markets'
European stock markets are sliding sharply, as the sell-off in the bond market hit equities.
The pan-European Stoxx 600 index has slumped by 1.2% this morning, with losses of at least 1% in Germany, Paris, Madrid and Milan, as well as London.
Britain’s FTSE 100 index is leading the rout, indeed – the blue-chip index is now down 1.9% or 201 points. That would be its biggest one-day fall since March.
Investors are clearly concerned by the tumble in bond prices today.
Neil Wilson, Saxo UK investor strategist, says:
Worryingly for Paris, the difference between French and German borrowing costs has widened to a 14-year high this morning.
The gap between French and German government bond yields – a market gauge of the risk premium investors demand to hold French debt – was at 127.51 bps, after reaching 128.80 bps, its highest level since June 2012, Reuters reports.
What is driving the global bond market sell-off?
Mohit Kumar, economist at Jefferies, cites worries about the amount of debt being issued to fund government deficits, as well as inflation concerns, telling clients:
France’s 10-year bond yield has hit its highest level since July 2002, Reuters reports, having risen to 4.96% this morning.
Wealth Club: the bond market is flashing warning lights
The bond market is “flashing warning lights”, says Susannah Streeter, chief investment strategist at Wealth Club:
UK 30-year bond yield hits 6%, highest since 1998
Another bout of turmoil in the bond markets is driving up government borrowing costs across the world, and the UK is in the firing line.
Bond prices are falling, which pushes up the yield – or rate of return – on the debt.
And just a moment ago, the yield on Britain’s 30-year gilts hit 6% for the first time since 1998.
The yield on shorter-dated UK bonds are also rising, which will drive up London’s borrowing costs and add to the pressure on chancellor John Healey ahead of the budget later this month.
The bond sell-off is being driven by fears of high inflation, as the Middle East conflict continues to restrict oil supplies from the region.
Last night, US 10-year Treasury yields hit their highest level since 2002, and earlier today Japan’s 10-year bond yield rose towards the 30-year high set last month.
US bonds weakened despite a lower than expected US inflation reading yesterday, which could have calmed investors’ nerves.
But instead, traders remain anxious that the US Federal Reserve will continue to raise interest rates to fight inflation.
Axel Rudolph, chief technical analyst at investing and trading platform IG, explains:
FTSE 100 begins October with 1% fall
The London stock market has got off to a bad start to the month.
The FTSE 100 share index has dropped by 116 points, or 1.1%, at the start of trading to 10,489 points.
British American Tobacco (-3.2%) and engineering company Weir (-2.7%) are the top fallers.
The average price of a terraced home is up 1.8% over last year – making it the strongest performing property type.
Flats, though, saw much less demand- their prices are “essentially unchanged” compared with a year ago, according to Nationwide’s data.
Chart: house prices across the country
House price growth slowed in most UK regions over the last three months, Nationwide reports.
Prices dropped, year-on-year, in four regions – the Outer Metropolitan area outside London, South West England, the East Midlands and East Anglia.
Introduction: Annual UK house price growth halves in September
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
The rate of annual house price growth across the UK has halved, according to lender Nationwide this morning, as rising mortgage rates cool the market.
Nationwide’s latest gauge of house prices shows that prices fell by 0.2% in September, dragging annual house price growth down to 0.8%, the weakest rate of growth since December 2025. That’s down from 1.6% in August.
This is weaker than the City expected: Economists polled by Reuters had forecast prices would be flat on the month and rise by 1.3% year-on-year.
The average price of a home across the country slipped to £274,251 last month.
Robert Gardner, Nationwide’s chief economist, attributed the slowdown on recent increases in mortgage rates from lenders:
Yesterday, Moneyfacts reported that the average two-year fixed residential mortgage rate is at its highest since July 2024, while the average five-year is at its highest since 10 October 2023 – with both rates above 5.9%.
Nationwide also reports that prices rose by fastest in Northern Ireland (where prices have risen 5.9% year on year), while East Anglia was the weakest performing region, with annual decline of 0.7%.
The agenda
7am BST: Nationwide’s house price index
9am BST: Eurozone manufacturing PMI for September
9.30am BST: UK manufacturing PMI for September
10.30am US Challenger Job Cuts
3pm BST: US manufacturing PMI for September
