UK Bonds Headed for Worst Month Since 1995 May Face More Losses
- Two-year yields have surged about 70 basis points this month
- Traders are pricing in a steeper policy trajectory for the BOE
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Front-end UK bonds haven’t had it this brutal in ages. In fact, they haven’t had this bad a month since 1995, a period when the economy was still grappling with Britain’s exit from the European Exchange-Rate Mechanism.
Two-year yields shot up more than 70 basis points in June through Monday, raising temperatures on fixed-income trading desks to match the weather outside in the UK. Lest it should be mistaken, the writing has been on the wall for gilts for a long time now.