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We think that Gilt yields will rise by less than Treasury yields

Although today’s UK inflation release has probably raised the likelihood that the Bank of England lifts interest rates next month, we think that investors are pricing in too many hikes over the next couple of years and are overestimating the strength of inflation further ahead. This contrasts with our view on US inflation, and informs our forecast that the 10-year Gilt yield will rise by less than the 10-year Treasury yield.

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