UK bonds have diverged from global peers due to concerns about increased debt following the budget announcement by Chancellor Rachel Reeves. This has led to a sell-off, causing yields on UK 10-year bonds to rise by up to seven basis points to 4.27%. This increase is notable considering that borrowing costs for bonds worldwide have been declining.

The risk premium for UK debt compared to safer German bonds has reached its highest level in over a year. The market is closely watching the Chancellor's plans, which could expand her borrowing capacity in the upcoming budget. This raises concerns about fiscal sustainability and investor confidence in UK government securities.