Government bond yields dip across the Atlantic as traders price-in 2024 rate cuts

The news: Government bond yields fell across the UK, US and Europe on Wednesday as investors’ expectations of central bank rate cuts accelerate following weaker than expected US jobs data.

The numbers: The largest move was in UK 10-year gilts, with yields decreased by 0.09%, to 3.95%, pushing the benchmark yield below 4% for the time since May. US 10-year Treasuries’ yields decreased 0.06%, while French, German and Italian 10-year government bond yields decreased by 0.02%.

The context: Government bond prices gained on Wednesday as investors increase their exposure to ‘safer’ fixed income instruments amid an uncertain macroeconomic backdrop. Market participants are now pricing close to six rate cuts from the European Central Bank (current benchmark deposit rate: 4.00%), five rate cuts from the US Federal Reserve (current policy rate: 5.375%), and four rate cuts for the Bank of England (current base rate: 5.25%) next year.