Global Market Trends Drive UK Gilt Yields to 23-Year High

UK 30-year gilt yields soared to their highest level since 1998 as global market trends continued to drive up bond prices. The move was largely fueled by a drop in U.S. jobless claims, which bolstered expectations of Federal Reserve rate hikes and sent investors seeking higher returns.

The yield on the UK's benchmark 30-year gilt peaked at 5.925% on Thursday, while 20-year yields reached 5.890%. Ten-year gilt yields rose to their highest level since July 2007, reaching 5.348%. The surge in yields reflects a shift in global capital flows away from Treasuries and into corporate debt.

Susannah Streeter, chief investment strategist at Wealth Club, attributed the move higher in gilt yields to 'steamy energy prices' and an underlying structural shift in the flow of money globally. She noted that some of the world's largest institutional investors are rotating away from Treasuries in search of returns.

The rise in yields is likely to intensify pressure on new UK finance minister John Healey ahead of his first annual budget statement next month, as higher gilt yields increase borrowing costs for the government. Market bets for a Bank of England rate hike in November have risen to near 90% probability.