Long-term UK borrowing costs at 28-year high as rising oil prices trigger global bond rout
Longer-dated gilt yields have also surged, which means higher borrowing costs for Andy Burnham’s government.
TL;DR
- Longer-dated gilt yields in the UK have surged, reaching their highest level since March 1998, increasing government borrowing costs.
- Oil prices are climbing, with Brent crude exceeding $92 a barrel and WTI nearing $87.35 a barrel.
- Government bond yields are rising globally, particularly in America, suggesting investors perceive the UK as a riskier investment due to political risk, low growth, and sticky inflation.
- The UK is projected to spend approximately 3.7% of its national income on debt interest payments.
- The AI boom is driving increased borrowing in the private sector, with AI firms expected to borrow around $500 billion, competing with government bond issuance.
- European stock markets are down, with the FTSE 100 falling 1.1%, amid concerns about renewed military action in the Middle East.
- UK manufacturing activity growth slowed in August, but hiring increased to its fastest pace in over two years.
- Shein's stock price tumbled 10% on its Hong Kong debut, closing below its offer price due to regulatory changes impacting its business model.
- Global bond sell-offs are pushing yields higher, with Japan's 10-year yield hitting 3% for the first time since 1996 and Germany's 10-year yield reaching a 15-year high.
- Expectations of interest rate hikes are increasing globally, with potential raises anticipated in New Zealand, the Eurozone, the US, and Japan.