Gilt yields are at lower levels than at any period during 2025 across all maturities, analysis from Hargreaves Lansdown has shown.

Yields began 2026 by falling, with most of the movement coming last week, although they fell further early this week.

Hargreaves Lansdown senior investment analyst, Hal Cook, noted that the move was largely linked to confidence that UK inflation was easing faster than expected.

This has resulted in expectations from Hargreaves Lansdown that there will be two rate cuts in 2026, including one as early as April.

“The clear desire from the government to change their future plans around issuing government bonds is also having an impact,” Cook continued.

“The government wants to reduce the amount of long-dated gilts being issued in future, in favour of issuing shorter-dated paper.

“The increased flexibility that comes with issuing shorter-dated paper, particularly when there are concerns around longer-term debt affordability, are a plus.

“It’s also positively viewed by a market that has fewer buyers of longer-dated gilts today than it did a few years ago (due largely to a shift in the pension scheme market).”

Therefore, longer-dated gilts have fallen further than shorter-dated ones, with the 20-year yield decreasing by 17bps since 5 January, while the five-year yield fell by around 10bps over the same period.

“It’s a far cry from this time last year, when gilt yields were spiking upwards to highs not seen since before the financial crisis,” Cook said.

“The issues then were concerns around the affordability of future government spending, low growth and higher inflation. The 10-year gilt yield touched 4.8 per cent 12 months ago. It’s down to around 4.37 per cent at the time of writing.

“US Treasuries were also spiking this time last year, which added to the move in the UK. That’s not the case today, with US Treasury yields broadly unmoved since the new year – highlighting that the shift in gilt yields is very much UK specific.”

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