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British government borrowing costs rose slightly on Friday but remained below Thursday’s highs as investors awaited key US jobs data released later in the day.
The 10-year annuity yield rose 0.01 percentage point to 4.82%, but remained well below Thursday’s 4.93%, its highest level since 2008. Yields move inversely to prices.
The pound, which had fallen 0.5% on Thursday, reversed early losses and rose 0.1% to $1.231.
Government bonds have struggled in recent trading as bond yields rise globally on the back of persistent inflation in some large economies.
Gordon Shannon, a portfolio manager at TwentyFour Asset Management, said Friday’s jobs report will be “important in keeping the market calm” given that U.S. Treasuries largely drive the performance of Treasuries. He said he was deaf.
In the longer term, the gold market will need to show some understanding of the tougher global backdrop as Mr Reeves cuts spending.Meanwhile, we will need to wait for a weaker pound to make gold leaf more attractive to overseas buyers. We’ll wait until it’s attractive enough,” he added.
The UK has been particularly hard hit by the global bond selloff as investors worry about the government’s large borrowing needs and the growing threat of stagflation, which is a combination of anemic economic growth and persistent price pressures. is receiving.
The credibility of the government’s economic plans has become vulnerable to strain on the bond market after Chancellor Rachel Reeves left just £9.9bn of room for amendments to fiscal rules in last autumn’s budget.
Pooja Kumra, UK rates strategist at TD Securities, said the key will be how Reeves deals with the lack of fiscal space.
“Investors are wondering what the chancellor’s next option will be… to cut spending, increase borrowing or increase taxes,” she said.
Economists estimate that the drop in gold stocks has effectively eliminated Mr. Reeves’ budget space. The level of bond yields will be a key factor in determining budget space, given their impact on the government’s interest bill of more than £100bn a year.
Labor has sought to reassure investors this week, with Darren Jones, Britain’s No. 2 at the Treasury, telling MPs on Thursday the government is committed to “economic stability and sound public finances”.
