UK 30-Year Bond Yield Reaches 5.5%, Highest Since 1998
The yield on the UK’s 30-year government bond reached 5.5%, the highest since 1998, amid rising global bond yields affecting risk assets.
- The Nasdaq dropped 10% following a U.S. equity sell-off, while bitcoin fell 8%.
- The UK bond yield increased by 8%, and the U.S. equivalent rose by 12%.
- Charlie Morris from ByteTree noted that investors may diversify into assets like bitcoin due to market instability.
- The surge in yields recalls the UK’s 2022 pension crisis, triggered by high borrowing costs.
- Global trade uncertainty is rising due to proposed tariffs by President Trump, impacting market stability.
- Past events showed how UK pension funds suffered during yield spikes, causing significant market turmoil.
The Bank of England was compelled to intervene in the gilt market during the previous crisis to stabilize conditions. A Chicago Fed Letter highlighted structural weaknesses in the UK gilt market compared to the larger U.S. Treasury market.