FX.co ★ UK 10-Year Bond Yield Nears 4-Month Low

The yield on the UK's 10-year government bonds, known as gilts, fell to 4.4%, marking its lowest point since December 12th. This drop reflects growing concerns about a slowing global economy, heightened by the intensifying trade conflict. On Friday, China declared it would impose a 34% tariff on all U.S. goods starting April 10, as a countermeasure to President Trump's recent tariff increases. Earlier in the week, the United States announced a 10% tariff on all imports, with significantly higher rates for certain countries, including an additional 34% levy specifically targeting Chinese goods. The UK will be subject to the 10% tariff as well. Consequently, traders have adjusted their expectations, anticipating further interest rate cuts by the Bank of England. The market is now anticipating approximately a 70 basis point reduction in the Bank of England's benchmark rate by December, compared to the approximately 43 basis points expected at the end of March. The probability of a 25 basis point rate cut at the Bank of England's upcoming monetary policy meeting in May has also increased to about 80%.