UK government bond yields increase, expectations for Fed rate cut cool off

The yield on UK government bonds has risen, following the trend of similar bonds in the United States and the Eurozone. This is because investors have reduced their expectations of major central banks cutting interest rates in the coming months. Earlier, the Federal Reserve cut interest rates on Wednesday, but indicated that rates may not necessarily be cut in December. Meanwhile, the European Central Bank kept rates unchanged on Thursday, noting that the economy is resilient. With declining expectations of rate cuts in the US and the Eurozone, expectations of rate cuts in the UK have also decreased. Data from the London Stock Exchange Group shows that the probability of the Bank of England cutting rates before the end of 2025 is currently 62%, down from 72% a week ago. Tradeweb data shows that the yield on UK 10-year government bonds has risen by 2.2 basis points to 4.430%.