Fiscal fears likely to stay baked into Gilt yields
We still think the 10-year Gilt yield will fall by the end of 2026 as the Bank of England cuts interest rates by more than investors seem to anticipate. But with term premia likely to remain elevated on the back of lingering fiscal concerns, and a problematic demand/supply imbalance in the Gilt market, we no longer expect that yield to fall below 4% next year.
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