PWLB briefing
End of Day Wrap-Up
UK gilt yields rose sharply across the curve today, driving PWLB rates higher and increasing borrowing costs for local authorities.
GILT MOVE SUMMARY
- → 1y: 4.211% (+8bp) — front-end led the move higher.
- → 5y: 4.925% (+15bp) — significant rise in short and medium tenors.
- → 10y: 5.299% (+15bp) — belly of the curve matched the front-end increase.
- → 30y: 5.928% (+6bp) — long end rose, but less than shorter maturities.
PWLB CLOSE SNAPSHOT
| Tenor | Rate | Change |
|---|---|---|
| 1y | 5.36% | +1bp |
| 5y | 5.84% | +3bp |
| 10y | 6.26% | +2bp |
| 25y | 6.83% | +1bp |
| 50y | 6.62% | +1bp |
WHAT DROVE TODAY
- → ECB rate hike and hawkish tone: The ECB raised its main rate to 2.65% (in line with forecast, up from 2.40%) and deposit rate to 2.50% (in line, up from 2.25%), with President Lagarde flagging persistent inflation risks, prompting a broad European bond sell-off.
- → Rising oil prices and US inflation data: Brent crude surged above $105, and US PPI came in at 0.40% MoM (in line with forecast, up from 0.10%), reinforcing global inflation concerns and pushing yields higher.
WHAT THIS MEANS
- → PWLB rates increased across all maturities, with the largest moves in shorter and medium tenors.
- → Borrowing costs for local authorities are now higher than at yesterday’s close.
- → Yield curve steepened at the front end, reflecting greater upward pressure on short and intermediate rates.
NEXT ON THE DIARY
- → 07:00 (Fri): GBP GDP MoM — Forecast: 0.0% (Prev: 0.30%)
- → 07:00 (Fri): GBP Manufacturing Production MoM — Forecast: 0.20% (Prev: -0.50%)
- → 07:00 (Fri): GBP Industrial Production MoM — Forecast: -0.20% (Prev: -0.20%)
Markets responded to a combination of central bank action and inflation concerns, resulting in a notable increase in borrowing rates.
This commentary is for information only and does not constitute financial advice. Always verify rates directly with PWLB or official sources before making borrowing decisions.