PWLB briefing
Morning Rate Update
PWLB rates have surged across the curve at the AM reset, with 10–12bp increases at all key maturities as UK government borrowing costs jump sharply.
⚠ VOLATILITY ALERT — PWLB AM rates reset 10–12bp higher across the curve, driven by a pronounced sell-off in gilts amid rising UK political risk and inflation concerns.
PWLB rates spike as gilt yields surge on UK political turmoil and inflation fears
PWLB SNAPSHOT
| Tenor | Rate | Chg |
|---|---|---|
| 1y | 5.34% | +8bp |
| 3y | 5.52% | +11bp |
| 5y | 5.66% | +12bp |
| 10y | 6.13% | +12bp |
| 25y | 6.72% | +11bp |
| 50y | 6.53% | +12bp |
Parallel shift higher: all maturities up 8–12bp, with the largest moves in the 5–50y tenors.
WHAT MOVED
- → Front, belly, and long-end all surged — 10–12bp increases across the curve, with no safe haven at any maturity.
- → No material curve twist — The move is a near-parallel upward shift, not a steepening or flattening.
- → Magnitude is significant — This is the largest single reset in recent weeks, pushing all key rates to new cycle highs.
CONTEXT
- → UK political risk in focus — News flow highlights mounting pressure on PM Starmer to step down and concerns over fiscal policy, with UK government bonds (gilts) selling off sharply.
- → Inflation and oil price fears — Ongoing Iran conflict and higher oil prices are cited as key drivers behind rising inflation expectations and higher borrowing costs.
- → UK retail sales slump — BRC Retail Sales Monitor YoY actual: -3.40% (forecast: 0.80%, previous: 3.10%), a sharp miss, but overshadowed by market reaction to political and inflation risks.
CALENDAR EVENTS
TODAY'S RELEASES
- → BRC Retail Sales Monitor YoY: -3.40% (forecast: 0.80%, previous: 3.10%) — A steep drop, well below expectations, but not enough to offset the upward pressure from political and inflation news.
REMAINING TODAY
- → 13:30 USD Core Inflation Rate MoM: Forecast 0.30%
- → 13:30 USD Inflation Rate MoM: Forecast 0.60%
- → 13:30 USD Core Inflation Rate YoY: Forecast 2.70%
- → 13:30 USD Inflation Rate YoY: Forecast 3.70%
- → 10:00 GBP Treasury Gilt 2031 Auction
NEXT 48 HOURS
- → Wed 13 May 13:30: USD PPI MoM — Forecast: 0.50%
- → Thu 14 May 07:00: GBP GDP Growth Rate YoY Prel — Forecast: 0.80%
- → Thu 14 May 07:00: GBP GDP MoM — Forecast: -0.20%
- → Thu 14 May 07:00: GBP GDP Growth Rate QoQ Prel — Forecast: 0.60%
- → Thu 14 May 13:30: USD Retail Sales MoM — Forecast: 0.50%
⚑ Treasurer's Note — This morning's PWLB reset delivers a blunt message: every key maturity is up 10–12bp, with 10y now at 6.13% and 25y at 6.72%. The move is broad-based, with no shelter at the short or long end. Political instability and inflation risk are front and centre, overwhelming softer retail data. If you have funding needs, be aware that the next reset will reflect any further gilt volatility — and right now, the market is offering no respite.
This commentary is provided for information only and is not financial advice. Please verify rates directly with PWLB or official sources before acting.
Gilt Edge Advisor — still here after every "one-off" shock became the new normal.