After hitting July 2011 highs of three per cent last Friday, the yields on gilts have now moved back above three per cent today (pictured). These 10 year bond yields imply the government's borrowing costs.
Our economics reporter Michael Bird:
Despite Carney’s recent insistence that the UK’s improving economic situation does not justify tightening the Bank’s policy yet, markets are still pricing in an earlier hike in rates.
Berenberg’s chief UK economist Robert Wood commented: “We may see an avalanche of words over the next few months as policymakers give speeches explaining their position, and two or three may even vote for more asset purchases to counter the recent rises in market rate expectations. But voting for action is likely to remain a minority pursuit.”
UK to sell £2.75bn 3.25% 2044 Gilts today. Getting more expensive by the week though.— deltahedge (@minefornothing) September 10, 2013