UK Pays 5.82% on £4 Billion 30-Year Bond as Oil Shock Squeezes Budget Headroom
Updated
Updated · The Guardian · Sep 9
UK Pays 5.82% on £4 Billion 30-Year Bond as Oil Shock Squeezes Budget Headroom
3 articles · Updated · The Guardian · Sep 9
Summary
The Treasury paid 5.82% to raise £4 billion in a 30-year bond sale on Tuesday, the highest rate since the Debt Management Office was created in 1998.
That borrowing cost reflects a wider bond sell-off as investors price in higher inflation, pricier oil and the risks of rising public debt; Brent crude was near $97 a barrel.
Before the 28 October budget, the Office for Budget Responsibility is expected to judge that higher gilt yields have erased at least half of the £24 billion fiscal headroom built up in March.
Andrew Bailey told MPs energy prices are pushing inflation and interest-rate risks upward, while saying the Bank of England has no hidden plan to raise rates next week.
Bailey said UK mortgage rates are already about 0.75 percentage point above pre-conflict levels—the biggest rise in the G7 apart from possibly Japan—showing how market stress is feeding through to households.