It's a rough tumble for the pound as 30-year yields in the UK blow up further, rising to 5.68% - its highest since 1998. This is going to put mounting pressure on Starmer and Reeves to figure out a plan to try and calm down markets and bolster confidence again.
The move higher in long-end yields has been one that is going on for a while. But as usually with cases like this, the pain point will come when it comes. And it looks like today is that day.
Just be mindful that this sort of blowing up in long-end yields is not just isolated to the UK. We're also seeing similar blow ups in the euro area and the US as well. From last week: The US yield curve continues to steepen post-Jackson Hole
10-year yields in the US are also seen up 4 bps to 4.270% today and 30-year yields are up nearly 5 bps to 4.965%. That's helping to underpin USD/JPY as well with the pair up 0.7% to 148.20 currently.
In terms of currency reactions, the pound is bearing the brunt of the pain here with GBP/USD down 0.5% to 1.3483 on the day. Other major currencies are also down slightly against the dollar now to kick start the session.
If anything, the signal here that the blow up in yields is starting to hit broader markets will be a negative for risk sentiment. So, keep an eye out on a spillover impact to equities later.
