The UK has become a "hard-hit area" for global bond market sell-off! With financial difficulties, the 30-year UK bond yield has risen to its highest level since 1998.

The yield on long-term UK government bonds has risen to its highest level since 1998, putting more pressure on the government led by UK Prime Minister Keir Starmer. On Tuesday, as global government bond prices fell across the board, the yield on UK 30-year government bonds rose by 3 basis points to 5.67%. The yield on UK 10-year government bonds also rose by 3 basis points to 4.78%. In early London trading, the pound fell by 0.4% to 1.3487 US dollars. The rising cost of borrowing is posing another challenge for the government. With the Autumn Budget meeting approaching, UK Chancellor of the Exchequer Rishi Sunak faces pressure to both cut spending and increase tax revenue to improve the UK's fiscal situation. Given the adjustments to welfare reform policies due to opposition among lawmakers, this task may prove politically difficult. Mohit Kumar, Chief European Strategist at Jefferies International, said, "Tax increases are an inevitable trend, but we are currently in a stage where further increases may backfire. We hold a negative view on UK long-term bonds and continue to see a widening trend in yield spreads." Economists predict that the UK will soon have to raise taxes to ensure compliance with the government's self-imposed fiscal rules. The cost of borrowing is a key factor determining the UK's fiscal situation, leaving Sunak and Starmer subject to fluctuations in bond yields. Starmer announced multiple changes to his team at Downing Street on Monday, aiming to restructure the government and gain greater influence in economic policy. The decline in UK government bond prices is also influenced by global factors, with UK bonds being a "hard-hit area" in the overall drop in long-term bonds. This sell-off reflects a weakening demand from traditional investors such as fixed-income pension funds for these securities, as well as concerns about structural high inflation. In the past 12 months, the yield on UK 30-year government bonds has risen by over 100 basis points, compared to approximately 80 basis points for US and German government bonds during the same period. Supply pressures may have also impacted the government bond market. The UK government is set to issue a new 10-year bond this week, with many strategists expecting it to be auctioned on Tuesday.