UK 30-year gilt yields reach highest point since 1998 amid Trump tariff fallout
British long-dated gilt yields surged to their highest point since 1998 on Wednesday, while global markets slumped in response President Donald Trump imposing his latest round of tariffs.
The yield on a 30-year gilt, or a UK government bond, hit a peak of 5.617% on Wednesday, up around 26 basis points and surpassing a previous 27-year high of 5.472% set in January.
It was at 5.6% when London’s financial markets closed for the day.
The import taxes announced by the US president last week, including a new 104% rate on some Chinese imports, took effect from midnight Washington time – just after 5am in the UK.
Mr Trump’s policies, which also include a 10% charge on UK goods, have sparked widespread turbulence on financial markets, with stock indices continuing their sharp falls on Wednesday morning.
But deeper concerns have come after a sharp rise in 30-year US Treasury yields overnight, which came before the rise in yields in the UK and elsewhere.
Bond yields move inversely to prices, and when they rise it means it is more expensive for governments to borrow money.
The sell-off in Treasuries signalled that US assets were temporarily losing their safe-haven status, analysts said.
George Saravelos, global head of foreign exchange research at Deutsche Bank, said that if the turbulence continues, “we see no other option for the Fed but to step in with emergency purchases of US Treasuries to stabilise the bond market”.
“This would be very similar to the Bank of England intervention following the gilt crisis of 2022,” he said.
Mr Saravelos added: “While we suspect the Fed could be successful in stabilising the market in the short-term, we would argue there is only one thing that can stabilise some of the more medium-term financial market shifts that have been unleashed: a reversal in the policies of the Trump administration itself.”
Investors are looking for any indication that the US government might blink in the face of the turmoil. For now, there are no signs of a willingness to back down or hit pause on tariffs
The sell-off in UK gilts, meanwhile, came amid rising bets from investors that the Bank of England will need to cut rates faster than previously expected this year.
Most traders now expect a rate cut of at least a quarter point at the Bank’s next meeting in May, while some were even pricing in a half-point drop.
Elsewhere, the FTSE 100 closed down 2.92%, Germany’s Dax fell 2.96% and France’s Cac 40 slumped 3.34%, shattering a fragile recovery staged across some financial markets the previous day.
Kathleen Brooks, research director at trading firm XTB, said the continued falls indicate that the tariffs are “a complete game changer for the global economy, and… too complex and chaotic for traders to price into markets in only a couple of days”.
Russ Mould, investment director at AJ Bell, said: “Investors are looking for any indication that the US government might blink in the face of the turmoil. For now, there are no signs of a willingness to back down or hit pause on tariffs.
“The longer the situation persists, the harder and more complex it will be to unpick.”
