Traders predict more trouble ahead for UK bond market

UK gilt yields are heading towards the levels of last year’s “mini” Budget crisis, investors say, after worse-than-expected inflation data forced markets to increase their interest rate predictions.

The yield on two-year gilts, which is highly sensitive to interest rate changes, hit 4.4 per cent on Wednesday following stronger than anticipated inflation.

The yield moves marked a sharp rise from 3.7 per cent earlier this month,…