Business
UK Government bond sell-off eases after Budget date confirmed
UK long-term borrowing costs have eased back from fresh 27-year highs after the Treasury revealed the keenly-awaited autumn Budget will take place on November 26 – also helping to take the pressure off the pound.
The yield on 30-year UK Government bonds – also known as gilts – edged lower to 5.691% at one stage, having earlier hit a new high not seen since 1998.
Gilt yields move counter to the value of the bonds, meaning their prices fall when yields rise.
The pound, which suffered hefty losses on Tuesday, also reversed early session falls to stand 0.1% higher at 1.341 US dollars and was flat at 1.15 euros.
Financial markets have been heavily focused on the upcoming Budget, with the sell-off in gilts largely down to worries over Britain’s public finances and as investors look for reassurances on how Ms Reeves will plug a black hole in the nation’s public finances – estimated by some to be as much as £51 billion.
But recent pressure on gilts have also come amid a bond sell-off globally, with European and US government bonds likewise seeing yields jump due to political uncertainty and public finance concerns.
Japan was the latest to see its 30-year yield sent soaring as it hit an all-time high on worries over rising debts.
The Governor of the Bank of England has stressed that rising UK long-term government borrowing costs are part of a global pattern and said it is “important not to focus too much” on longer-term bond yields.
It came after the yield on 30-year Government bonds, called gilts, rose to a 27-year high earlier on Wednesday before dropping back later in the session.
Andrew Bailey told the Treasury Select Committee: “We’ve seen a steepening of yield curves across the developed world – the underlying driver of this is global.
“When you look at UK yields regarding the steepening, we are broadly in the middle of the pack. Germany and Japan have gone up significantly more than us, the US less than us.
“It’s important not to focus too much on the 30-year-bond rate.
“It’s a number that gets quoted a lot. It is quite a high number but it is not what is being used for funding at all at the moment actually.
“There is a lot of dramatic commentary on this but I wouldn’t exaggerate the 30-year bond rate.”
Rising yields on these bonds mean it costs more for governments to borrow from financial markets.
But experts believe a driver of weakness in the UK bond market this week could have been compounded by concerns over the Prime Minister’s Government reshuffle on Monday and Chancellor Rachel Reeves’s position.
No 10 insisted on Tuesday that the Chancellor’s authority was not being dealt a blow by Sir Keir Starmer’s shake-up in a bid to calm market jitters.
This week’s reshuffle saw the Chancellor’s deputy, Darren Jones, move into a new role as chief secretary to the Prime Minister.
Health Secretary Wes Streeting told Sky News: “The Chancellor, since she came in last year, has been determined to restore stability to our economy, to get growth back into our economy, and to create the conditions where we can get the nation’s finances back to health.”
He said while there are “encouraging signs”, there is “much more to do”.
Mr Streeting added: “Britain is not out of the woods, and that is why the discipline and the focus that she (the Chancellor) has brought on cost of living, on economic growth and creating the conditions for businesses to be successful is really important, and the discipline we show as a Cabinet in terms of public spending is really important.”
London’s FTSE 100 Index lifted 35.6 points to 9152.3 in Wednesday mid-morning trading, while gold earlier hit new record highs once again – above 3,530 US dollars – as nervous investors flocked to the safe haven asset.
Kathleen Brooks, research director at XTB, said the “focus is likely to remain on the Budget for some time” and cautioned that bond markets will continue to see volatility.
She said: “UK bond yields have been on an upward trajectory for most of this year and have risen significantly since Labour took office.
“The bond market will need some hefty persuading that Labour will rein in public sector spending and bring the UK’s finances under control.
“This is why we expect to see bouts of UK bond market volatility in the coming months.”
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The rupee fell to 88.36 against the U.S. dollar, eclipsing its previous all-time low of 88.33 hit on September 1
Rupee depreciates against dollar.
The Indian rupee slipped to a record low on Friday as traders remained jittery over news related to U.S. tariffs on India, while likely dollar-selling intervention by the Reserve Bank of India curbed sharper losses, traders said.
The rupee fell to 88.36 against the U.S. dollar, eclipsing its previous all-time low of 88.33 hit on September 1. The currency was last at 88.2750, down 0.1% on the day.
Traders cited strong buying from foreign banks amid speculation about ongoing tariff pressures on India from the U.S.
The “spike on USD/INR was caused by worries of higher tariffs on India but state-run banks stepped in over 88.30 to cap losses, most likely on behalf of the Reserve Bank of India,” a senior trader at a bank said.
Merchant flows are relatively muted today so activity is skewed towards the dollar buying side, the trader added.
MUFG said the rupee could weaken to 89 by the first quarter of calendar year 2026 under the assumption that the steep tariffs remain for now but are eventually lowered to 25% sometime next year.
Foreign portfolio investors have continued to withdraw from Indian equities with net sales of $1.4 billion so far in September, taking the total outflow so far this year to over $16 billion.
(This story has not been edited by News18 staff and is published from a syndicated news agency feed – Reuters)
Aparna Deb is a Subeditor and writes for the business vertical of News18.com. She has a nose for news that matters. She is inquisitive and curious about things. Among other things, financial markets, economy, a…Read More
Aparna Deb is a Subeditor and writes for the business vertical of News18.com. She has a nose for news that matters. She is inquisitive and curious about things. Among other things, financial markets, economy, a… Read More
September 05, 2025, 13:28 IST
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Sunny weather and the women’s Euro football tournament helped to lift retail sales in July, according to the latest official figures.
Retail sales volumes rose by 0.6% in July, according to the Office for National Statistics (ONS), which was higher than analysts’ forecasts.
The release of the figures had been delayed by two weeks over concerns about the quality of the data.
The ONS has come under fire recently over the reliability of some of its statistics.
While sales volumes in July rose, sales in the three months to July were down 0.6% when compared with the previous three months.
“Supermarkets, sports shops and household goods stores had a strong start to the year, but spending there has fallen since March,” said the ONS’s director general of economic statistics, James Benford.
However, he added this was partially offset by strong sales online and at clothing and footwear stores.
Mr Benford apologised for errors in past data, and said the ONS had “improvement plans” in place.
The ONS had delayed the latest retail sales figures after it discovered a problem with its data, which meant that seasonal adjustments had not been made properly.
The latest release from the ONS revises most of the retail sales data for the past year.
“The new figures published today show a similar overall pattern of three-month on three-month growth, but with less volatile month-on-month changes,” Mr Benford said.
ONS statistics are used in deciding government policy which affects millions, and are used by the Bank of England to make key financial decisions.
The ONS said online retailers and clothing stores saw strong sales growth in July, which retailers put down to new products, the hot weather, and an increase resulting from the UEFA Women’s Euro 2025 tournament.
However, Paul Dales from Capital Economics warned that both these factors were boosts that “won’t be repeated”.
Dr Kris Hamer from the British Retail Consortium said July was a “good month for retail sales, as the warm, sunny weather and packed sporting schedule in the first half of the month got people spending”.
“Unfortunately, this level of sales growth makes little dent on the £7bn of new costs that retailers are having to shoulder following last year’s Budget.”
US President Donald Trump signed an executive order on Thursday that cuts tariffs on Japanese car imports from 27.5% to 15%, easing uncertainty for motor industry giants like Toyota, Honda and Nissan.
It formalises an agreement, which was announced in July, to apply a 15% levy to almost all Japanese exports to the US – including vehicles and pharmaceuticals.
Tokyo has also agreed to invest $550bn (£410bn) in US projects, and gradually open its economy to American goods, including cars and rice, the White House said.
The deal came after months of negotiations between the US and Japan in the wake of Trump announcing sweeping tariffs on most countries around the world in April.
“Finally,” Japan’s top trade negotiator, Ryosei Akazawa, said in Japanese as he reposted a White House announcement about the executive order.
According to the order, the deal will help reduce America’s trade deficit with Japan and provide US businesses “breakthrough openings”.
The White House said Japan has committed to buying $8bn worth of US goods a year – including agricultural products, fertilisers and bioethanol.
It added that Tokyo has also agreed to gradually increase its purchases of US-grown rice by 75% – a concession it had previously resisted to protect its agricultural industry.
Trump hailed the agreement as “massive” when it was announced in July.
“It’s a great deal for everybody. I always say it has to be great for everybody. It’s a great deal,” he said in a news conference.
The Japanese economy is reliant on selling goods abroad, with the US as its biggest export market.
Cars account for around 20% of the country’s total exports.
Trump’s tariffs, which came into effect in August, have sent shockwaves around world as governments and businesses adapt to the changing global market.
Last month, Toyota warned that the impact of US tariffs would cost it around $10bn this year.
Shares in Japanese carmakers and parts suppliers rose on Friday in Tokyo after the executive order was signed.
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