PIMCO stays optimistic on UK gilts despite rising yields and selloff

PIMCO maintains a positive outlook on UK gilts despite a recent selloff. This week, 10-year gilt yields reached 4.92%, the highest since 2008, currently sitting at 4.83%. The rise in yields is attributed to domestic factors, including the latest budget. Concerns about fiscal contraction are growing, with potential spending cuts or tax increases if trends continue. Market expectations have shifted, as many anticipated a rally in gilts due to expected rate cuts by the Bank of England. However, worries about stagflation are now more prominent.