Leading Indicators | UK yields steady as asset performance diverges

UK yields stabilise as markets digest fiscal shift

UK 10-year gilt yields stabilised on Monday after last week’s sharp rise, which was driven by the government’s decision to scrap planned income-tax increases ahead of the November Budget. The UK 10-year yield slipped -4bps to 4.54%, holding near a one-month high. Clearer fiscal signalling from the chancellor could firm market confidence and narrow gilt risk premia, bringing UK borrowing costs closer to those of other major economies and offering a steadier backdrop for policy and investment into 2026.

How far can fiscal policy support the UK’s disinflation path?

Headline CPI is expected to ease to roughly 3.5% in tomorrow’s release. The focus will move quickly to the November Budget, where markets will assess whether Reeves’ expected fiscal proposals align with efforts to sustain disinflation. The Bank of England continues to project inflation falling back to its 2% target by Q2 2027.

Safe-haven demand strengthens as speculative assets weaken

Over the past year, Bitcoin has fallen -26% from its earlier peak, bringing it back to its lowest level since April. Gold, by contrast, has continued to strengthen after a brief setback earlier in the year, holding above the $4,000 mark, supported in part by rising expectations of rate cuts. The widening gap between the two may signal a shift in market tone, with speculative assets under pressure and interest in traditional safe-haven assets, such as CRE, continuing to build.