The decline in UK government bonds has intensified, particularly affecting short-term bonds, as the money market significantly reduces expectations for the Bank of England's rate cuts this year. The yield on the UK's 2-year government bonds increased by 15 basis points to 4.05%, while the 10-year yield rose by 11 basis points to 4.75%. Currently, the money market anticipates a 75 basis point rate cut from the Bank of England this year, down approximately 15 basis points from previous expectations.
Data released earlier showed that the UK economy experienced its strongest growth in nearly a year in February. Concurrently, concerns over tariff issues have led to a surge in US short-term and long-term inflation expectations, reaching multi-decade highs. This has led the money market to reduce bets on the Federal Reserve's rate cuts. In the US, the 2-year government bond yield increased by 8 basis points to 3.93%, and the 10-year yield rose by 14 basis points to 4.56%.
