UK 10-year gilt yields rose to their highest level in almost two years last night ahead of jobs data this morning that could have an effect when the Bank of England will raise interest rates.
The yields rose above 2.6 per cent, their highest level since October 2011, as investors’ concerns grew that interest rates could rise sooner than expected.
In last week’s inflation report, Bank governor Mark Carney introduced a policy of explicit forward guidance, guaranteeing that interest rate would stay at their historically low levels until UK unemployment fell to 7 per cent, which according to the Bank’s forecast will not happen until the third quarter of 2016.
But strengthening UK data suggests it may happen before that, spooking investors. The Office for National Statistics will publish data this morning on employment.
