Summary

• The 10Y gilt yield hit new highs on the back of inflation and political risks, but investors should not ignore the role of the Bank of England’s QT in this.
• We estimate the 2s10s GBP curve steepened by 60bp more than the USD curve due to the increased gilt supply and the divergence can continue.
• This could also be a lesson for Warsh who may look to walk a similar path.

By Michiel Tukker, Senior UK & Eurozone Rates Strategist

Global factors add to GBP term premium, but not entire story

The 10Y gilt yield has hit its highest level since 2008, and whilst the near-term focus remains on

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