UK Gilt Yields Hit Five-Week Low After Burnham Budget While US Treasuries Also Retreat

The UK bond market staged a notable recovery after Prime Minister Andy Burnham's debut budget, delivered by Chancellor John Healey on October 28, reassured investors with fiscal restraint. The 10-year gilt yield fell as low as 5.25% on Thursday, putting gilts on track for their best weekly performance in weeks and reaching a five-week low. Investors welcomed the budget's cautious tone, though analysts noted that structural fiscal reforms were largely deferred.

Across the Atlantic, US Treasury yields also pulled back as markets awaited fresh economic data. The 10-year Treasury yield, which has surged roughly 25% over the past 12 months amid persistent inflation concerns and elevated government debt, eased on October 30. The Federal Reserve held interest rates steady at its October meeting, though two officials dissented in favor of a hike, underscoring that the tightening bias has not fully disappeared. The 10-year yield had ticked to around 5.05% in the immediate wake of that decision before retreating.

Gold extended losses to hit a fresh monthly low, pressured by oil-driven inflation fears bolstering bets on further Fed tightening and by declining US bond yields weighing on the dollar. The confluence of a more restrained UK fiscal stance and a data-dependent Fed kept both equity and bond markets cautious heading into the final days of October.