The government’s ongoing efforts to shorten its debt issuance mix is likely helping to address the demand/supply imbalance in the Gilt market and easing upward pressure on longer-dated Gilt yields. Combined with our view that the Bank of England will cut interest rates by more than investors currently anticipate, this informs our forecast for the 10-year Gilt yield to fall from 4.37% currently to 4.25% by end-2026.
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