UK Government Pays Highest 30 Year Bond Interest Rate Since 1998
2 sources across 2 countries · Germany · United Kingdom
Who reported this
- Der Spiegel
- The Guardian
What the colours mean
- Left
- Centre-left
- Centre
- Centre-right
- Right
- A hatched block means the outlet is affiliated with, or controlled by, a state.
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Every outlet covering this story shares the same political lean; read with that in mind.
The United Kingdom government paid the highest interest rate on a 30 year bond since 1998 on Tuesday. The UK Debt Management Office placed a bond with a volume of approximately 4.25 billion pounds at a yield of 5.82 percent. This development increases the fiscal pressure on Chancellor John Healey, who is scheduled to present his first budget on October 28 and has emphasized a commitment to budget discipline.
The high rates reflect a global bond market sell off driven by fears of rising inflation. These concerns are linked to higher oil prices resulting from conflict between the USA and Iran. Bank of England governor Andrew Bailey told MPs that energy prices are putting upward pressure on inflation and interest rates. He noted that UK mortgage rates have risen significantly, representing the largest increase in the G7 with the possible exception of Japan. Brent crude was trading at about 97 dollars a barrel on Tuesday.
Despite the high costs, the bond auction saw strong investor demand. Bids exceeded 85 billion pounds, with Bank of America, Goldman Sachs, and J.P. Morgan acting as joint lead managers. The Office for Budget Responsibility is expected to forecast that higher borrowing costs will eliminate at least half of the 24 billion pounds of headroom established in the March forecast.
How each side framed it
- Centre-left
- Outlets of this lean framed the event as a reflection of global financial instability and a significant challenge to the new Chancellor's fiscal planning.
Sources
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