Bond Yields Reach Pre-2008 Norms, But Market May Still Be Painful
The recent surge in bond yields has sparked concerns about their historical levels. However, taking a broader view suggests that rates are well within normal ranges. The Bank of England's base rate data stretching back to 1694 indicates that borrowing costs have been at similar levels for most of the last three hundred years.
The return to more normal interest rates was a key factor in the recovery of UK bank stocks after the 2008 financial crisis. This experience highlights the importance of adopting a long-term perspective when assessing market trends.
Economic news next week will focus on the impact of higher bond yields on fixed mortgage rates and house prices. The Bank of England publishes mortgage data on Tuesday, while Nationwide updates its House Price Index on Wednesday.