LONDON (Reuters) – U.K. government debt yields surged to new multi-year highs on Tuesday, up from 20 and 75 ) led gains in year bonds, which have climbed sharply since Finance Minister Kwasi Kwarteng announced sweeping tax cuts last week.
30-year Treasury yields soared to their highest levels since 2002, closing just under 5%, roughly double their August levels, only in It rose nearly half a percent on Tuesday.
Yield is 20 year fallback bond rises 35 basis points, while 10 year-backed bonds continued to climb and remain on track for their biggest gain in any month since at least 1957.
Investors in many wealthy economies have seen a rapid rise in demand for holding government bonds in recent weeks amid fears of soaring inflation.
But the jump was particularly pronounced in the UK, where new Prime Minister Liz Truss pledged to end economic policy “orthodoxy”.
UK gilt yields accelerated on Tuesday as Bank of England chief economist Huw Pill said the BoE could make a “significant policy response to the government’s massive tax cuts” “, but should wait until the next meeting in November.
Some investors and economists have said the Bank of England should now hold an emergency meeting and raise interest rates sharply to support the value of the pound and avoid further inflationary pressures.
Interest rate swaps are now only pricing in the unlikely chance of an emergency BoE rate hike in the coming weeks, but hinted that the BoE will raise rates from 2 at its next meeting.25% Now. Bank rates are expected to hit 6% in March next year.