UK Bond Yields Near 6% as Liz Truss Warns Spending Cuts May Be Forced

  • Liz Truss warned that surging bond yields could force the UK government into emergency spending cuts.
  • The 10-year gilt yield reached about 5.2%, while the 30-year yield approached 6%.
  • JPMorgan said a U.S. 10-year yield near 5% could trigger a 5% to 8% global equity correction.

UK borrowing costs remained elevated as former Prime Minister Liz Truss warned that a bond-market selloff could force the government into emergency spending cuts. She said high debt and currency debasement were driving a global rise in government bond yields and argued that the Bank of England’s quantitative easing had diluted the currency. The 10-year gilt yield was around 5.2%, while the 30-year yield approached 6%. Truss said supply-side reforms, faster economic growth and spending restraint were needed to reduce the risk. The U.S. 10-year Treasury yield moved back above 4.8%, and gold and Bitcoin retreated after earlier gains. JPMorgan Chase’s global head of investment strategy said a U.S. 10-year yield approaching 5% could prompt a 5% to 8% correction in global equities. UK markets also remained under pressure, with the FTSE 100 falling 0.3% to 10,760 after the 10-year gilt yield reached its highest level since August 2007. Investors continued to assess fiscal policy, oil prices, inflation and interest-rate expectations, while markets priced a 25-basis-point Bank of England rate increase by year-end.

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