UK borrowing costs climbed on Thursday, touching their highest levels of the year, as bond investors worried about the additional borrowing chancellor Rachel Reeves set out in the Budget.
The yield on the 10-year gilt rose 0.09 percentage points to 4.44 per cent, while the two-year yield climbed 0.11 percentage points to 4.42 per cent.
The 10-year yield has risen from around 3.75 per cent in mid-September as investor anxiety over a boost to debt sales added fuel to what has been a global sell-off in government bonds.
UK government bonds initially rallied on Wednesday and through the chancellor’s speech, before sharply reversing as investors digested an uplift in gilts issuance this financial year and extra borrowing in future years.
Mohit Kumar, of broker Jefferies, said in a note on Thursday that it was sceptical on the growth estimates in the Budget, “and the immediate concern for the market would be fiscal expansion funded by long-dated issuance”.
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