FX.co ★ UK 10-Year Gilt Yield Falls to 1-Week Low

The yield on the UK's 10-year gilt has decreased to 4.62%, marking its lowest point since May 9. This decline is influenced by weak US economic data, which has increased expectations of interest rate cuts by the Federal Reserve, consequently reducing global yields. In April, US retail sales growth experienced a marked slowdown, and unexpectedly, producer prices fell, primarily due to a decline in trade margins. This adds to the growing evidence of the economic impact of tariffs implemented under President Trump. Conversely, the UK economy exhibited a 0.7% growth in the first quarter, its most rapid expansion in a year. In response, traders have tempered their expectations for aggressive easing by the Bank of England. However, some economists advise caution, highlighting that much of this Q1 growth is attributed to a significant surge in factory output in February. This uptick is likely a result of attempts to accelerate exports to the US before anticipated tariffs by President Trump are enacted. Additionally, labor market data revealed an increase in the unemployment rate to 4.5% and a deceleration in wage growth, which could potentially exert pressure on household spending.