Inflation Expectations in the United Kingdom decreased to 5.20% in April from 5.40% in March of 2023
THE FRONT END OF THE UK GILTS YIELD CURVE HAS BEEN MISPRICED FOR MANY MONTHS, DESPITE CORE INFLATION RATE STANDING AT 6.2%, CPI INFLATION RATE 10.1% AND MOST IMPORTANT INFLATION EXPECTATIONS IN 12 TO 24 MONTHS STANDING AT 5.2%. RISING INTEREST RATE ENVIRONMENT REQUIRE GILTS YIELD CURVE TO STEEPEN IN LINE WITH INFLATION EXPECTATIONS TO THE LEAST, BECAUSE CONSIDERING CORE AND CPI INFLATION RATE, BORROWING COSTS ARE YIELDING NEGATIVE RETURNS FOR INVESTORS AND DON’T COVER FOR VOLATILITY IN GILTs PRICES.
