Policy signals shape the rates outlook

U.S. and UK policy signals suggest that long-term yields may face less upward pressure than current Bank of England expectations imply.

• From September, the U.S. Treasury will at least double purchases in the 10-to-20-year and 20-to-30-year sectors, from $2 billion to $4 billion or more per operation, through the early-November Quarterly Refunding Announcement.
• The announcement eased pressure on long-end yields: 30-year Treasury yields and the U.S. dollar fell, while gold rallied, although the purchases are not quantitative easing or yield-curve control and are an order of magnitude smaller than the Fed’s 2011 Operation Twist.
• UK headline CPI rose to 2.9% year-on-year, broadly in line with expectations, mainly because a higher energy price cap increased household bills; services inflation continued to decelerate.
• Higher energy prices could push headline inflation higher through the rest of 2026, but there is limited evidence so far that they are feeding into wages or broader domestic price pressures.
• UK wage growth was slightly stronger than expected, while the wider employment trend indicates that the labour market is considerably less tight than a few years ago.

Takeaway: Treasury buybacks signal sensitivity to elevated long-term yields, but the economic outlook remains the main driver of U.S. rates; in the UK, markets pricing 40–50 basis points of hikes over the next year appear too aggressive unless energy costs generate second-round inflation effects.