UK government long-term borrowing costs have eased after reaching their highest level since 1998 earlier in the week.
The interest rate on 30-year government bonds, known as the yield, slipped to 5.55%, dropping from a high of 5.75% on Wednesday.
Although bond yields have been rising globally, there have also been market concerns about UK government finances.
However, Bank of England governor Andrew Bailey said on Wednesday that it was “important not to focus too much” on longer-term bond yields.
He told the Treasury Committee that interest rates had been rising “across the developed world”.
The UK was not alone in seeing borrowing costs rise earlier in the week, with yields on 30-year German, French and Dutch bonds climbing to their highest since 2011.
In the US, 30-year Treasury bond yields rose to their highest in more than a month.
Factors such as geopolitical tensions, US President Donald Trump’s trade policies and high levels of government borrowing have been behind the increases.
Mr Bailey told the Treasury Committee that the 30-year yield on UK bonds was “quite a high number but it is not what is being used for funding at all at the moment actually”.
Governments borrow money from investors by selling bonds – which is a loan the government promises to pay back at the end of an agreed time.
The yield on 30-year UK government bonds – which are known as gilts – has been rising for a number of months.
The US bond market, which is seen as underpinning the global financial system, has also seen pressure due to concerns about high debt, the impact of Trump’s tariffs on inflation, and worries about the independence of the Federal Reserve after Trump’s order to fire one of its governors.
After rising to nearly 5% for the first time since mid-July on Wednesday, US 30-year bond yields slipped back to about 4.88% after data showed job openings fell in July.
This reinforced expectations of an interest rate cut by the US central bank, the Federal Reserve, later this month.
In the UK, although the Bank of England has been cutting rates, Mr Bailey said that “there is now considerably more doubt about exactly when and how quickly” rates will be cut further, reiterating his comments after August’s rate cut.
Sterling was down against the dollar to $1.3439 after falling sharply on Tuesday.
