23 March 2026
If you are covering the volatility in the bond markets this morning, please see the following comment from Richard Carter, head of fixed interest research at Quilter Cheviot:
“Gilt yields have moved sharply higher as markets reassess the inflation outlook and push rate expectations upwards. Only a few weeks ago investors were positioned for cuts, yet the market is now pricing in around 1% of hikes this year. That swing underlines how quickly the inflation narrative has shifted, with higher energy prices and the prospect of greater fiscal intervention adding to the pressure.
"This episode is somewhat different to what we saw around the 2022 Ukraine crisis. Inflation had already been easing going into the Iran conflict, and interest rates are starting from a much higher level, which should reduce the need for the Bank of England to react as aggressively as it did then.
"Despite the volatility, starting yields look compelling. Ten year gilts above 5% and UK corporate bonds near 6% offer meaningful income for long term investors. But until there is some de escalation in the Middle East, bond markets are likely to stay under strain as geopolitical risk keeps inflation concerns alive.
“For households, the immediate impact is likely to be felt most clearly through borrowing and retirement products. Higher gilt yields tend to feed into mortgage pricing, especially for fixed rate deals and lenders may continue to edge rates higher if volatility persists. On the other hand, annuity rates generally move in line with gilt yields, so anyone approaching retirement could see further improvements in the income available.”
