UK 30-Year Gilt Yields Hit 28-Year High on Iran War, Elections

UK long-term government borrowing costs surged to their highest level since 1998 on Tuesday, as yields on 30-year gilts peaked at 5.798 percent amid the escalating Iran war and investor concerns over impending elections.

The yield on these bonds, which move inversely to their prices, climbed 0.14 percentage points during the afternoon, marking a 28-year high. The 10-year gilt yield also rose sharply by 0.12 to 0.15 percentage points, reaching 5.122 percent, its highest in 18 years. These increases exceeded movements in other major economies, including the US and Germany, where 10-year yields have steadily climbed but remained relatively flat on Tuesday. The FTSE 100 index fell 1.27 percent to 10,232.71.

Traders attributed the spike primarily to the Iran conflict, which has disrupted shipping through the Strait of Hormuz, effectively closing it to oil and liquefied natural gas supplies. This has driven up energy prices, including petrol and fertiliser costs, fueling fears of resurgent inflation across the UK economy. Britain, as a major energy importer, faces heightened exposure compared to other G7 nations, according to analysts and the International Monetary Fund.