UK 30-year bond yield hits 6%, highest since 1998<\/p>\n
Another bout of turmoil in the bond markets is driving up government borrowing costs across the world, and the UK is in the firing line.<\/p>\n
Bond prices are falling, which pushes up the yield \u2013 or rate of return \u2013 on the debt.<\/p>\n
And just a moment ago, the yield on Britain\u2019s 30-year gilts hit 6% for the first time since 1998.<\/p>\n
The yield on shorter-dated UK bonds are also rising, which will drive up London\u2019s borrowing costs and add to the pressure on chancellor John Healey ahead of the budget later this month.<\/p>\n
The bond sell-off is being driven by fears of high inflation, as the Middle East conflict continues to restrict oil supplies from the region.<\/p>\n
Last night, US 10-year Treasury yields hit their highest level since 2002, and earlier today Japan\u2019s 10-year bond yield rose towards the 30-year high set last month.<\/p>\n
US bonds weakened despite a lower than expected US inflation reading yesterday, which could have calmed investors\u2019 nerves.<\/p>\n
But instead, traders remain anxious that the US Federal Reserve will continue to raise interest rates to fight inflation.<\/p>\n
Axel Rudolph, chief technical analyst at investing and trading platform IG, explains:<\/p>\n
double quotation mark\u201cUS bond yields are refusing to budge, with the 10-year yield hitting its highest level since 2007 despite softer-than-expected inflation.<\/p>\n
While the latest data has reduced expectations of an October Fed rate hike, investors remain wary that persistent inflation and higher oil prices could keep rates elevated for longer. The dollar is benefiting from that caution, climbing to a three-month high, while the prospect of a December rate increase keeps pressure on bond markets.<\/p>\n
Share<\/a><\/p>\n Updated at\u00a003.34 EDT<\/p>\n Key events<\/p>\n FTSE 100 begins October with 1% fall<\/p>\n The London stock market has got off to a bad start to the month.<\/p>\n The FTSE 100 share index has dropped by 116 points, or 1.1%, at the start of trading to 10,489 points.<\/p>\n British American Tobacco (-3.2%) and engineering company Weir (-2.7%) are the top fallers.<\/p>\n Share<\/a><\/p>\n The average price of a terraced home is up 1.8% over last year \u2013 making it the strongest performing property type.<\/p>\n Flats, though, saw much less demand- their prices are \u201cessentially unchanged\u201d compared with a year ago, according to Nationwide\u2019s data.<\/p>\n Share<\/a> Photograph: NationwideShare<\/a>Chart: house prices across the country<\/p>\n House price growth slowed in most UK regions over the last three months, Nationwide reports.<\/p>\n Prices dropped, year-on-year, in four regions \u2013 the Outer Metropolitan area outside London, South West England, the East Midlands and East Anglia.<\/p>\n