Yields on long-dated UK government bonds climbed sharply on Tuesday as gilts underwent a broad selloff in the run-up to local elections scheduled for Thursday. At 1104 GMT the 30-year gilt yield reached 5.768%, up more than 12 basis points from Friday's close. That level takes the 30-year yield to its highest point since May 1998.
Moves were not confined to the longest maturities. The benchmark 10-year gilt yield, which reflects new public debt issuance costs, rose by 13 basis points to 5.095%, pushing it beyond the 5% mark. That advance leaves the 10-year yield on course for what would be its highest closing level since 2008. Shorter-dated paper also saw notable increases: two-year yields climbed 13 basis points to 4.558%.
Markets were closed on Monday for a public holiday. During that closure, U.S. and German yields increased amid ongoing disruption to shipping in the Strait of Hormuz, developments that coincided with the broader rise in European yields after trading resumed. The cumulative effect across maturities on Tuesday produced a simultaneous uptick at the short, intermediate and long ends of the gilt curve.
The selloff came ahead of the local elections, which market participants were watching as a potential near-term political event. The price action left long-dated sovereign borrowing costs at levels not observed in nearly three decades, while medium-term issuance benchmarks also registered significant gains.
Overall, the session on Tuesday highlighted a synchronized repricing across the gilt curve: the long end reached levels last seen in 1998, the 10-year benchmark moved above 5% for the first time in many years and two-year yields rose materially from last week's close. These moves reflected market dynamics both domestic - the timing of local elections - and international - the influence of higher U.S. and German yields amid shipping disruption in the Strait of Hormuz during the holiday period.