From Morningstar: 2025-04-02 10:15:00

Investors started selling UK government bonds in 2025, causing price volatility. Yields on long-term bonds hit historic levels, reflecting concerns about the UK government’s fiscal position. The market chaos was linked to global trends and the start of a new Trump administration. Analysts advised against panic, citing past market fluctuations. The Chancellor’s Spring Statement reassured markets with a projected budget surplus by 2030. Some fund managers believed the fiscal headroom should have been higher for gilts to rise. The UK’s economic growth forecast was revised down, affecting bond yields. Bond yields have risen significantly as the second quarter begins, with longer-term bonds offering attractive returns. Governments across Europe are increasing debt issuance to fund various costs, affecting bond markets. Currency fluctuations and interest rates impact bond returns, with the UK offering higher yields than other developed markets. The outlook for UK government bonds in Q2 remains uncertain, with factors like inflation and economic growth influencing yields. The government may need to adjust spending and borrowing plans due to changing economic conditions. The Bank of England’s quantitative tightening policy could impact the supply and demand for government debt. Bond markets are closely watching government actions to maintain fiscal stability.



Read more at Morningstar: Are UK Government Bond Yields Attractive Right Now?