According to Jinshi, the abnormal phenomenon that has plagued the UK bond market for more than a year ended on Monday, with the UK 10-year government bond yield rising back above the 2-year yield. This shows that the UK's bond market has returned to normal, and that investors are pricing in the end of the era of tight monetary policy that distorted the interest rate market. Since May 2023, the UK 2-year government bond yield has been higher than the 10-year government bond yield. As the Bank of England's interest rate cut approaches, the inversion ends. Traders expect the Bank of England to begin easing policy as early as August, with a probability of a 25 basis point rate cut next month approaching 55%.
