Closing summary
Government bonds have largely reversed earlier increases in their yields, or interest rates, but remain stuck at multi-year highs.
The yield on the 30-year gilt has eased to 5.409%, after hitting 5.472%, the highest since 1998, piling pressure on the chancellor, Rachel Reeves. The equivalent US Treasury yield fell by 1 basis point to 4.952%.
The Treasury will be “ruthless” over public spending cuts to help meet the government’s fiscal rules at this summer’s spending review, Keir Starmer said today.
The rise in UK government bond yields in recent days has driven annuity rates sharply higher (see post 8.03).
Stock markets are falling on both sides of the Atlantic.
In the currency markets, the US dollar is charging ahead, boosted by Friday’s strong labour market report, with traders dialling back their rate cut expectations. They are now expecting just one quarter point reduction this year.
Reflecting the bullish economic outlook, the dollar rose by 0.3% against a basket of major currencies to its highest level in more than two years. The pound is now down by 0.5% to $1.2140, a 14-month low, while the euro is 0.4% lower at $1.0202.
Oil prices have jumped by more than 1% after the US announced wider sanctions on Russian oil exports on Friday, which are expected to hit supplies to China and India. Brent crude is now at $80.74 a barrel, up $1 a barrel, to the highest since August.
Our other main stories today:
Thank you for reading. We’ll be back tomorrow. ATB! – JK
Updated
The Bank of England has just sold £750m of gilts with a maturity of between three and seven years. It got a bid to cover ratio 2.24, which indicates ok demand (but not great).
