UK government bond yields have increased, mirroring movements in US and Eurozone bonds. This shift follows the US's temporary halt on imposing tariffs on Mexico, which led to a sell-off in safe-haven bonds. Economists from Pantheon Macroeconomics have expressed concerns that tariffs remain a risk and could negatively impact the UK economy by slowing growth while increasing inflation.
Experts suggest that US trade policies might disrupt supply chains, potentially causing stagflation in the UK. The imposition of tariffs could lead to a rebound in inflation, prompting the Bank of England to reduce interest rate cuts. According to Tradeweb data, the yield on the 10-year UK government bond rose by 4 basis points, reaching 4.520%.
