United Kingdom 10 Years Bond - Forecast (2024)

FAQs

United Kingdom 10 Years Bond - Forecast? ›

The United Kingdom 10 Years Government Bond Yield is expected to be 4.485% by the end of September 2024. It would mean an increase of 22.6 bp, if compared to last quotation (4.259%, last update 28 May 2024 5:23 GMT+0).

The United Kingdom 10 Years Government Bond Yield is expected to be 4.654% by the end of September 2024. Video Player is loading. It would mean an increase of 42.7 bp, if compared to last quotation (4.227%, last update 22 May 2024 20:23 GMT+0).

The United Kingdom 10 Years / United States 10 Years Government Bond spread value is -17.3 bp (last update 22 May 2024 8:15 GMT+0).

When bond yields increase, their prices fall and government bonds have lost a lot of value since the start of 2022. As an example, the average total return of the IA UK Gilts sector from 31 December 2021 to 31 October 2023 has been -27.61%. We've seen rates rocket from near zero to 5%.

Higher interest rates help to slow down price rises (inflation). That's because they reduce how much is spent across the UK. Experience tells us that when overall spending is lower, prices stop rising so quickly and inflation slows down. That has started to happen in the UK.

The United Kingdom 5 Years Government Bond Yield is expected to be 4.562% by the end of September 2024.

According to our latest forecasts, we now expect UK and global ex-UK (GBP hedged) bonds to return around 4.9% and 5.0%, respectively, on an annualised basis over the next decade, compared with our previous 10-year annualised forecasts of 1.3% and 1.3%, respectively, before the rate-hiking cycle began.

Considered one of the lowest-risk investments on the U.S. market, 10-year Treasurys are a “risk-free” benchmark against which other investments and debt are compared. (Three-month Treasury bills are another.) While no investment is ever completely risk-free, Treasury notes come close if held to maturity.

The current yield rate is 2.582% — it's increased by 4.58% over the past week.

Basic Info. 10 Year Treasury Rate is at 4.47%, compared to 4.43% the previous market day and 3.73% last year. This is higher than the long term average of 4.25%. The 10 Year Treasury Rate is the yield received for investing in a US government issued treasury security that has a maturity of 10 year.

Will UK bonds ever recover? ›

We expect UK bonds to deliver annualised² returns of around 4.4%-5.4% over the next decade, compared with the 0.8%-1.8% 10-year annualised returns we expected at the end of 2021, before the rate-hiking cycle began.

Within government bonds, the 10-year US Treasury yield has risen from around 3.9% at the start of the year to 4.5% in early May. Similarly, the 10-year UK gilt yield has gone from around 3.5% to 4.2%. Yields move in the opposite direction to prices, so US and UK government bonds have fallen in value so far in 2024.

UK Government bonds are typically viewed as one of the 'safest' forms of bond. That's because the government usually has significant influence over its currency, so can print more money to pay back investors if it needs to.

While lower-rated bonds have been strong performers in 2023, we think the market is going to be more discerning as we head into 2024. We expect higher quality bonds will be the best bond performers over the next year. We also think performance will be more dispersed than it has been.

Most bonds have suffered sharp price falls this year as investors feared that the consequence of higher inflation would be a destruction of the spending power of the income from the bond, and that higher interest rates would lead to the price of bonds falling.

The 10-year yield is currently around 4.5%.

Bond prices move in inverse fashion to interest rates, reflecting an important bond investing consideration known as interest rate risk. If bond yields decline, the value of bonds already on the market move higher. If bond yields rise, existing bonds lose value.

The 10-year note is undoubtedly a highly significant benchmark for global financial markets. A rising yield indicates investor confidence in the economy but also suggests higher borrowing costs, potentially slowing economic growth. Conversely, a falling yield may signal economic uncertainty.