UK Borrowing Costs Hit 19-Year High as Bond Yields Surge on Inflation Fears
TLDR
- UK 10-year gilt yields hit 5.43%, the highest since 2007, driven by rising oil prices and inflation fears
- Brent crude topped $109 a barrel after Houthi rebels seized a key Red Sea port
- Morgan Stanley now expects the Federal Reserve to raise rates in both September and December
- The FTSE 100 closed down 0.4% at 10,658, though well off its session lows
- The Bank of England is expected to hold rates Thursday, but markets price in four hikes by spring 2027
The cost of UK government borrowing rose to its highest level in nearly two decades on Tuesday, as rising oil prices pushed bond yields higher across global markets.
The UK's bond market is collapsing.
Today, the yield on a 30Y Bond in the UK hit 5.95%, its highest level since March 1998.
Yields in the UK are now 15 TIMES above 2020 levels, with the highest borrowing costs among G7 countries.
What is happening? Let us explain.
(a thread) pic.twitter.com/VDINc2LYMn
- The Kobeissi Letter (@KobeissiLetter) September 15, 2026
The yield on 10-year UK gilts climbed to 5.43%, a 19-year high. Short-term borrowing costs also jumped, with two-year UK bond yields topping 4.9% for the first time in three years.
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