Finance

UK 30-year gilt yields top 6% for the first time since 1998

Published by Global Banking & Finance Review

Posted on October 1, 2026

2 min read

· Last updated: October 1, 2026

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Finance Banking Markets Bonds UK

UK 30-Year Gilt Yields Surpass 6% for First Time Since 1998 Amid Market Shifts

Market Movements and Economic Implications

Surge in Gilt Yields and Comparison to Historical Highs

LONDON, Oct 1 (Reuters) - British 30-year government bond yields surged to their highest since early 1998 on Thursday, following another sharp rise in U.S. Treasury yields even as oil prices steadied on renewed hopes of an end to the Iran war. Thirty-year gilt yields rose as high as 6.029%, their highest since January 1998, and up 6 basis points on the day, according to LSEG data. Ten-year gilt yields hit the highest since July 2007, up 8 basis points at 5.510%. There was also a sharp rise in short-dated gilt yields that are more sensitive to the outlook for interest rates and inflation, with 5-year yields at their highest since July 2008. Thursday's rise was sharper than in equivalent German Bunds, reminding some analysts of Britain's fiscal vulnerabilities before finance minister John Healey's first budget later this month which is expected to raise taxes.

Factors Driving the Yield Increase

British government borrowing costs have risen more sharply than those of most other European governments since the start of the Middle East conflict on concerns about the country's reliance on natural gas for its home heating and power generation.

Investor Expectations and Central Bank Response

Investors think the central bank is likely to raise interest rates in November or December for the first time since the outbreak of the Iran war and another move is priced in for February."The market is priced for quite a lot of interest rate hikes ... I don't think the bank (BoE) wants to hike interest rates because they're looking at household budgets, they're going to be hit by higher food prices, by higher energy prices, all of these things coming down the line," said Jane Foley, head of G10 FX strategy at Rabobank.

(Reporting by Suban Abdulla; Editing by Dhara Ranasinghe and Amanda Cooper)

References

Frequently Asked Questions

Why did UK 30-year gilt yields rise to 6%?

The surge was driven by sharp increases in US Treasury yields, inflation concerns, and investor anticipation of possible interest rate hikes by the Bank of England.

How do current gilt yields compare to historical levels?

UK 30-year gilt yields reached their highest point since January 1998, with 10-year and 5-year gilt yields also hitting multi-year highs.

What impact do higher gilt yields have on the UK economy?

Higher gilt yields increase government borrowing costs and may affect household budgets through higher energy and food prices.

What are investors expecting from the Bank of England?

Investors anticipate the Bank of England may raise interest rates in November or December, with another hike possibly in February.

How does the UK bond market compare to other European countries?

British government borrowing costs have risen more sharply than most other European countries, highlighting fiscal vulnerabilities.