UK borrowing costs return to pre-selloff levels on Trump relief

Editorial & Advertiser disclosure

Global Banking and Finance Review is an online platform offering news, analysis, and opinion on the latest trends, developments, and innovations in the banking and finance industry worldwide. The platform covers a diverse range of topics, including banking, insurance, investment, wealth management, fintech, and regulatory issues. The website publishes news, press releases, opinion and advertorials on various financial organizations, products and services which are commissioned from various Companies, Organizations, PR agencies, Bloggers etc. These commissioned articles are commercial in nature. This is not to be considered as financial advice and should be considered only for information purposes. It does not reflect the views or opinion of our website and is not to be considered an endorsement or a recommendation. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third-party websites, affiliate sales networks, and to our advertising partners websites. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish advertised or sponsored articles or links, you may consider all articles or links hosted on our site as a commercial article placement. We will not be responsible for any loss you may suffer as a result of any omission or inaccuracy on the website.

Finance

Posted By Global Banking and Finance Review

Posted on January 21, 2025

UK borrowing costs return to pre-selloff levels on Trump relief

LONDON (Reuters) - British government borrowing costs fell on Tuesday to their lowest since before the start of this month's selloff as investors on both sides of the Atlantic breathed a sigh of relief about Donald Trump's first moves as U.S. president.

Thirty-year gilt yields - which were hit hardest in this month's selloff - sank to their lowest since Jan. 3 at 5.139%, extending their recent fall into a fifth day. Ten-year yields also touched a post-Jan. 3 low at 4.582%.

Investors offloaded UK government bonds heavily in the first half of January amid a broader selloff of state debt on worries about U.S. inflation pressures resulting from Trump's policies.

The increase in UK borrowing costs had threatened to knock finance minister Rachel Reeves off track for meeting her fiscal rules, possibly requiring her to cut spending as soon as March to get back on track.

Trump only briefly mentioned import tariffs in his inauguration speech on Monday and U.S. Treasury yields - which influence British gilts - fell to their lowest since early January on Tuesday.

Also on Tuesday, Britain's debt office attracted record orders for its syndicated sale of a 15-year conventional gilt.

Two-year British government borrowing costs - which are particularly sensitive to speculation about interest rate cuts - fell to their lowest since Dec. 16 at 4.307%.

Investors were putting the chance of a quarter-point Bank of England interest rate cut on Feb. 6, after its February monetary policy meeting, at about 86%.

(Writing by William Schomberg; Editing by Gareth Jones)

Recommended for you