British Bond Yields Soar Amid Trade Tensions

British 30-year government bond yields rose sharply, reaching the highest levels since 1998 due to U.S. tariffs on China. This increase follows significant changes in yields, affecting investors' expectations of interest rate cuts by the Bank of England. Finance minister Rachel Reeves remains firm on fiscal rules.

The return on British 30-year government bonds surged significantly on Wednesday, hitting levels not seen since May 1998. The surge follows a rise in U.S. Treasury yields after President Trump imposed 104% tariffs on China.

This yield climb is one of the largest in a single day since October 2022, post-former Prime Minister Liz Truss' mini-budget fallout. It places pressure on the Bank of England to potentially slash rates sooner than initially anticipated.

Finance Minister Rachel Reeves has resisted calls to adjust fiscal projections, maintaining commitment to achieving a balanced budget despite potential economic disruptions. Meanwhile, investor appetite for British government debt remains robust, evidenced by the oversubscription of a recent gilts auction.

(With inputs from agencies.)