As bets on rate cuts increase, UK bond yield curve surges

On August 2nd, Jinshi data reported that the steepness of the yield curve of 2-year and 10-year UK government bonds is the largest since November 2022, as traders increase their bets on the Central Bank of England cutting interest rates, and concerns about the outlook for global economic rise intensify. The yield spread between 2-year and 10-year UK government bonds widened to 20.5 basis points, with the 2-year yield falling by 7 basis points to 3.65% and the 10-year yield falling by 2 basis points to 3.86%. The money market expects the Central Bank of England to cut interest rates by 26 basis points in September, with a cumulative 60 basis points cut by the end of the year. This expectation has increased by 3 basis points and 4 basis points respectively since the Central Bank of England’s interest rate cut on Thursday.