By Adrian Kerr


U.K. borrowing costs eased and the British pound edged higher Tuesday, marking some signs of stabilization, with Treasury Chief Rachel Reeves set to face questions in Parliament later around the recent turmoil in bond markets.

The 10-year gilt yield was recently down one basis point to 4.860%, Tradeweb data show. The 30-year gilt yield also nudged down one basis point to 5.418%. Long-dated gilt yields hit multi-year highs last week, part of a global fall in bonds amid investor concerns over the slower pace of rate cuts by the U.S. Federal Reserve.

The pound also edged higher after it fell on Monday to a two-year low against the dollar and its weakest in 10 weeks against the euro. It was recently up 0.2% against the dollar at $1.2238, having fallen as low as $1.2100 on Monday, FactSet data show.

Under-fire U.K. Treasury Chief Rachel Reeves will appear in Parliament later after returning from a visit to China, where she will face questions around the recent surge in U.K. borrowing costs that threaten the government's spending plans. The gilt market weakness mirrors a recent jump in bond yields globally, particularly in U.S. Treasurys. After expectations of steady interest-rate reductions in recent months, inflation has proven stubborn in many areas, forcing investors to reevaluate those bets and sell off bonds.

The stabilization in U.K. assets comes as global markets more broadly showed signs of stabilizing on Tuesday. The 10-year U.S. Treasury yield was recently down four basis points to 4.764%, according to Tradeweb.

The selling pressure on government bond markets is subsiding, but bond markets are not out of the woods yet, Commerzbank Research's Christoph Rieger said in a note, with real yields rising to historic highs ahead of key U.K. and U.S. CPI data on Wednesday, the bank's head of rates and credit research said.

Equities markets were also mostly up after recent falls, with U.S. stock futures for the S&P 500 last up around 0.4%, and the Stoxx Europe 600 up 0.6% in early trade. The FTSE 100 was trading around flat.


-Emese Bartha and Miriam Mukuru contributed to this article.


Write to Adrian Kerr at adrian.kerr@wsj.com


(END) Dow Jones Newswires

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