UK GILTs 10Y yield could surprise to the upside 5.5%<6.0%
The GILTs yield curve has been stabilised by the Bank of England's stealth intervention in the GILTs market. However, this intervention in open markets would not last definitively, and the Bank of England had already announced its winding down of GILTs purchases.
Going forward, CPI and CORE Inflation in the UK economy are going to be slightly higher for longer compared to other G7 and G10 countries, considering the consistent Trade Balance deficits that the UK operates with, which compounds with multiyear Pound depreciation, that could make much difficult for the Bank of England to see CPI and CORE Inflation converging down to 2.0%<2.5%.
Thereby, large Investment Funds would require a much higher Yield and coupons on GILTS issuances to discount CPI and CORE Inflation in the UK, even UK Investment Funds would rather take a 5.5%<6.0% Yield on a 10Y GILT rather than 3.5% Yield.
GILTS Yield curve could be due for another Shock and Awe market volatility period, and a 5.5%<6.0% Yield spike could be necessary before the YIELD curve would steadily drift down.
Going forward, CPI and CORE Inflation in the UK economy are going to be slightly higher for longer compared to other G7 and G10 countries, considering the consistent Trade Balance deficits that the UK operates with, which compounds with multiyear Pound depreciation, that could make much difficult for the Bank of England to see CPI and CORE Inflation converging down to 2.0%<2.5%.
Thereby, large Investment Funds would require a much higher Yield and coupons on GILTS issuances to discount CPI and CORE Inflation in the UK, even UK Investment Funds would rather take a 5.5%<6.0% Yield on a 10Y GILT rather than 3.5% Yield.
GILTS Yield curve could be due for another Shock and Awe market volatility period, and a 5.5%<6.0% Yield spike could be necessary before the YIELD curve would steadily drift down.