PWLB briefing
Morning Rate Update
PWLB rates reset this morning with a modest upward move across the curve, led by the long end, as gilts respond to higher government borrowing and political signals on fiscal flexibility.
⚠ RATE ALERT — AM reset: 2–5bp rise across most maturities, with the largest moves at 25y and 40y, as gilt yields react to increased fiscal risk and political headlines.
PWLB rates edge higher as markets digest Burnham’s fiscal stance
PWLB Snapshot
| Tenor | Rate | Chg |
|---|---|---|
| 1y | 5.17% | -1bp |
| 3y | 5.40% | +1bp |
| 5y | 5.58% | +2bp |
| 10y | 6.06% | +4bp |
| 25y | 6.67% | +5bp |
| 50y | 6.47% | +4bp |
Curve shows a mild steepening, with the largest increases at the long end.
What Moved
- → Long end leads — 25y and 40y maturities rose +5bp, outpacing shorter tenors.
- → Short end mixed — 1y dipped slightly (-1bp), while 3y and 5y saw only modest gains.
- → Belly and long-end divergence — The curve steepened as moves increased with maturity.
Context
- → UK government borrowing overshot forecasts — Newswires and official data confirm higher-than-expected public sector borrowing in the first quarter, putting fiscal discipline in focus.
- → Political signals on fiscal rules — New PM Burnham and Chancellor Healey have both emphasised using “flexibility” within fiscal rules, prompting a market response in gilts.
- → Labour market data mixed — Unemployment steady at 4.9% (in line), but average earnings (4.3%) came in below forecast (4.5%), and payrolls fell (-4k vs +20k expected).
Calendar Events
Today's Releases
- → Unemployment Rate — Actual: 4.90% (Forecast: 5.0%, Previous: 4.90%). In line with expectations; no surprise for gilts.
- → Average Earnings incl. Bonus — Actual: 4.30% (Forecast: 4.50%, Previous: 4.40%). Slightly softer than expected, marginally supportive for gilts.
- → HMRC Payrolls Change — Actual: -4K (Forecast: 20K, Previous: 3K). Weaker than forecast, but overshadowed by fiscal news.
Remaining Today
Nothing further scheduled today.
Next 48 Hours
- → Wed 22 Jul 07:00: Inflation Rate YoY — Forecast: 2.70%
⚑ Treasurer's Note — The PWLB curve has shifted higher by 2–5bp at the AM reset, with the largest moves at the long end (25y +5bp, 40y +5bp). This reflects market concern over increased government borrowing and political signals on fiscal flexibility. If you are planning to access PWLB later today, be aware that any further gilt volatility could be captured at the next reset. Monitor for tomorrow’s inflation data, which may add to rate sensitivity.
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 more fiscal pivots than a Westminster roundabout.