UK Gilts Latest News June 2025

Our latest monthly commentary for investing in UK gilts. Includes latest gilts UK news.  Update on latest gilt yields.  Changes in Gilt yield curve. Gilts auction results.  Gilts ETF flows.  For UK financial advisers.

Investing in Gilts: key trends in the UK gilts market

Subscribe to our weekly newsletter to get all our insights to your inbox (for UK financial advisers only)
In our monthly commentary on the UK gilts market, we focus on three key aspects:

1. The near-term direct gilts yields and “ladder” for maturities under 5 years
   
2. Changes to the UK yield curve over all maturities and real yields
   
3. Supply/demand and ETF flows

Near-term direct gilts ladder

The near-term direct gilts ladder shows the yield to maturity and coupon rates and is available to our clients.

For the 0.125% Treasury Gilt 30-Jan-26 (T26), Yield to Maturity was 3.210% at end June 2025, compared to 3.349% at end May 2025.
​
For UK advisers wanting the full gilts ladder including Gross Comparable Yield for higher and additional rate taxpayers, please contact us as this is only available to our clients.

Changes to the Yield Curve

The chart below shows changes to the UK yield curve over the last 3 and 12 months.

Over the past three months, the 10-year Gilts yield decreased from 4.68% to 4.49%, and the 2-year yield dropped from 4.20% to 3.82%.
​
The UK yield curve steepened suggesting that investors expect rate cuts from the Bank of England, driving short term yields lower, while longer-term yields have decreased but there are still concerns about sticky inflation and government borrowing that kept upward pressure on 10-year yields.

UK Yield Curve

Real yields

We look at real 10 year yields which adjust 10 year nominal yield for (10 year) break-even inflation expectations as a measure of whether bonds are preserving capital on inflation-adjusted terms on a forward-looking basis.

The nominal yield on 10-year UK government bonds has risen significantly from near-zero levels in early 2021. As of end of June 2025, the 10-year gilt yield stood at 4.50%, down from 4.65% in May 2025.
​
This decrease reflects rate cuts from BoE following weak economic data and tariff war concerns. Yields peaked at 4.87% in January 2025, marking a three-year high. Real yields remain positive, meaning that after accounting for inflation expectations, investors continue to earn inflation-adjusted real returns on 10-year UK government bonds.

UK nominal vs real yields

DMO Auction Results

From a supply/demand perspective, the UK DMO completed the following auctions last month with Bid-to-Cover ratio of 2.88x to 3.51x.
Bid-to-Cover ratio higher than 2.5 indicates strong demand for Gilts. It means bids were 2.5 times the amount of bonds offered. This suggests investor confidence and successful auctions.

From a flows perspective, UK Gilts ETF’s experienced cumulative YTD flows of £552m, increasing from £344m at the end of May 2025 driven by flows in All Stocks.

Summary

Near-term Direct Gilts are a tax-efficient alternative to cash deposits for higher and additional rate taxpayers.
​
Longer-dated gilt yields reflect the market’s view on the credibility of the UK governments borrowing and spending plans.

Notes

Yield at Average Accepted Price (AAP) refers to the yield of an investment, calculated using the average price at which the investment was accepted, rather than the current market price. (Source: DMO)
​
Bid to Cover ratio is a key indicator of demand for government debt at auction, is calculated by dividing the total amount of bids received by the amount offered at a gilt auction. (Source: DMO)