08.12.202512:25:55UTC+00UK 10-Year Gilt Yields Climb as Wage Growth Accelerates

The yield on the UK 10-year gilt surpassed 4.5% as recent data indicating accelerated wage growth presented new challenges for the Bank of England's policy considerations. This increase in yields was influenced by wider global movements; particularly with German bund yields rising after ECB official Isabel Schnabel hinted at potential rate hikes, and Japanese bond yields reaching multi-year highs in anticipation of a possible Bank of Japan rate increase next week. A survey conducted by REC/KPMG revealed that starting salaries for permanent staff experienced the sharpest increase in five months, even though there was a slowdown in hiring and an uptick in the number of jobseekers. This scenario intensifies the inflation concerns that the Bank of England must balance against the need to foster economic growth. Despite these complexities, market expectations for the Bank’s rate decision next week remain relatively stable, with an estimated 84% likelihood of a rate cut. Furthermore, a second rate reduction of a quarter point is now almost fully anticipated for June, and there's about a 75% chance of another cut being implemented in April.