Global Rates Notes Revising Gilt Yield Forecasts Higher

Economics Research 14 September 2026 | 6:41AM BST

Global Rates Notes: Revising Gilt Yield Forecasts Higher

We revise our 10y Gilt yields forecast to 5% at end-2026 from 4.4%. This follows our George Cole | latest revisions to our 10y UST and Bund yield forecasts (now 4.75% and 3.25% at Goldman Sachs International end-2026 from 4.40% and 3.0%), as well as our new BoE forecast of a hike in November. Exhibit 1 shows our new Gilt curve forecasts.

Gilt yields are the highest among the G10 and have exhibited one of the highest betas to energy prices and global yield moves. Our previous forecasts were consistent with this, based on the premise that Gilts would be the biggest beneficiary of inflationary relief. Instead, energy prices are making new highs – and even if they moderate from here, we have likely passed the threshold for action for the BoE and so this limits the prospect for front-end led relief. Our 6m and 12m views point to steeper curves eventually, but the front-end still remains vulnerable to further energy price upside. So far, 2s10s Gilts has not flattened like in Germany, and we continue to see this as a tactical risk into next week’s BoE.

We think there is no mystery why Gilts have a strong correlation with energy prices and global yields:

n UK growth and inflation has higher forecast uncertainty than other major economies. n The UK has seen the largest increase in duration-weighted bond supply, as well as the biggest realignment of long-end demand. n Monetary policy has delivered larger surprises on central bank meeting days. n And UK fiscal policy – while forecasting eventual deficit reduction – is beholden to macro volatility because of the tight levels of headroom relative to interest rate and energy price volatility.

By the barest of margins, Gilts have seen the biggest yield increase since the war in Iran began. And yet, Gilts have performed relatively well on a cross-market basis since the underperformance in March and April. Swap spreads are at the wides of the year, indicating no supply-related stress. Beyond next week’s BoE, the end-October budget will be the next major test. Reliance on near-term borrowing by a substantial increase in FY 2027 Gilt issuance would likely pressure Gilt risk premium.

Weaker labour market data and progress in underlying inflation could allow the front-end to eventually undershoot current pricing. But into upcoming BoE meetings the dynamics look to be shifting for the UK curve, with a repricing of faster BoE hikes – even vs current pricing – a key flattening risk. Without deeper inversion, or evidence of restrictive financial conditions in macro assets or economic data, front-end rates are likely to be the main source of volatility for the UK curve.

Investors should consider this report as only a single factor in making their investment decision. For Reg AC certification and other important disclosures, see the Disclosure Appendix, or go to

Goldman Sachs Global Rates Notes

Exhibit 1: Higher Gilt Yields On BoE Hike

GBP - NEW NEW vs OLD NEW vs Forwards 2y 5y 10y 30y 2y 5y 10y 30y 2y 5y 10y 30y Spot Q Q Q Q Q Q Q Q Q Q Q Q Q Q

Source: Goldman Sachs Global Investment Research

Exhibit 2: UK 2s10s has remained steep vs Germany Exhibit 3: Swap spreads remain wide despite Gilt sell-off bp bp % bp UK 2s10s DE 2s10s UK 10y UK 10y Swap Spread (Inverted, RHS)

Gilts cheaper 4.9 on swap spread Sep-25 Nov-25 Jan-26 Mar-26 May-26 Jul-26 Sep-26 Jan-24 May-24 Sep-24 Jan-25 May-25 Sep-25 Jan-26 May-26 Sep-26

Source: Goldman Sachs Global Investment Research, Goldman Sachs FICC and Source: Goldman Sachs Global Investment Research, Goldman Sachs FICC and Equities Equities

George Cole William Marshall Simon Freycenet Goldman Sachs International Goldman Sachs & Co. LLC Goldman Sachs Bank Europe SE - Paris Branch

Isabella Rosenberg Friedrich Schaper Loic Mathys Goldman Sachs & Co. LLC Goldman Sachs & Co. LLC Goldman Sachs International