Gilt yields reach levels last seen in 1998 and the FTSE 100 has its worst week since April. Healey's Budget is 23 days away
The yield on the 30-year gilt moved above 6% on 1 October for the first time since 1998, according to City AM and FXStreet. Last week the FTSE 100 fell 2.2%, its worst week since April, as bond yields rose around the world. On Monday it recovered, closing up 0.34% at 10,497.94 on gains in energy and mining shares, ahead of Paris and Frankfurt. Sterling was just above $1.32 and close to its strongest this year against the euro, per FXStreet, partly because stress in French government bonds makes UK assets look safer within Europe. Chancellor John Healey presents his Budget on 28 October. City AM says he is under pressure to fund defence and to help households, and the Bank of England meets soon afterwards. The UK economic calendar has no major releases this week.
A 30-year yield above 6% raises the interest bill on government debt for decades and narrows the Chancellor's choices. Gilts matter beyond Whitehall: they price fixed-rate mortgages and company borrowing. A Budget that markets read as lacking credibility would push yields higher still.
If you have a tracker or variable mortgage, nothing changes today. If you are about to fix, quotes follow swap rates, which follow gilt yields, so expect lenders to hold their prices high until the Budget. Savers with money in cash see the other side: rates stay high.
The market is saying the UK must not borrow more. Healey has little room, and the Budget will have to include tax rises or spending restraint to keep investors calm.
The rise is global, led by US and French bonds, not a verdict on Britain. Sterling is steady, and the UK is being treated as the safer European borrower.
Both views are partly right, and the Budget will show which one the Chancellor believes. The line to watch is the 30-year yield over 6%: a Budget that takes it back below is a success; one that pushes it to new highs is a warning.
DailyDrop U.K. edition No. 1 · Morning · MON., OCT. 5, 2026