The 10-year gilt yield has returned to ~4.60%, but the shape of the yield curve is raising eyebrows. Unusually, the curve has steepened—especially between the 10- and 30-year points—while shorter-term yields (like the 5-year) have also ticked higher.

What does this mean? Markets appear to be pricing in more long-term risk—not necessarily due to inflation, but concerns over the UK’s fiscal position. The steepening suggests investors want a higher premium to hold longer-dated debt, reflecting doubts about the government’s ability to absorb future shocks.

With global trade uncertainty rising (thanks to the US tariff pivot), these risks become more real. And given the UK’s already narrow fiscal margins, the government’s wiggle room is being squeezed further.

⚠️ Bottom line: The bond market is flashing a warning—not of imminent crisis, but of fragile resilience in the face of potential global economic headwinds. With limited fiscal headroom and rising global risks (like new U.S. tariffs), confidence in the UK’s ability to absorb shocks is being tested. Add in rate cut speculation, and the pound faces growing downside pressure in the near term. If you’re concerned about FX volatility, speak with Clearview today about strategies to hedge against these currency risks.