Britain’s government bond market is entering a delicate holding pattern as investors wait for new Prime Minister Andy Burnham to lay out his economic programme, with 10-year gilt yields hovering near 5% and the Bank of England widely expected to keep interest rates unchanged this week.

Gilts Steady as Markets Await Policy Clarity

Ten-year gilt yields eased two basis points to roughly 5.01% in late July, while 30-year yields — the maturity most sensitive to fiscal risk — slipped to around 5.72%, according to Bloomberg. The modest moves came as data showed UK private-sector wage growth slowing to its weakest pace since 2020, tempering expectations for near-term rate hikes even as markets digest the transition to a new premiership.

The yield backdrop remains elevated by historical standards. Earlier in the month, the 10-year gilt yield climbed toward 5.1% — its highest level since May — after outgoing Finance Minister John Healey warned of rising costs of doing business and persistent cost-of-living pressure, according to Trading Economics. The 30-year gilt, a proxy for long-term fiscal credibility, touched its highest level since May 19 in the same window.

Inflation Cools, Giving the Bank of England Room to Hold

Underpinning the relative calm in bond markets is an unexpectedly benign inflation print: annual consumer price growth slowed to a 15-month low of 2.6% in June, below the Bank of England’s own forecasts, per Trading Economics. Delayed pass-through of wholesale energy costs to regulated household bills has helped keep UK inflation below both the US and eurozone, where rate increases are still expected before year-end.

Consumer-facing data has also surprised to the upside. UK retail sales rose 1% in June, confounding forecasts for a 0.3% decline, boosted by warmer weather and a consumer spending lift tied to the football World Cup, while consumer confidence climbed to a six-month high in July.

Why Gilt Yields — Not Bank Rate — Are Driving Mortgage Costs

For households, the more immediate transmission channel runs through the gilt market rather than the Bank of England’s policy rate directly. UK fixed-rate mortgages are priced off swap rates that track gilt yields, meaning the current 10-year yield sits roughly 1.32 percentage points above the Bank of England’s 3.75% base rate, according to mortgage-market analysis from SalaryWise. That spread — near the top of its multi-year range — means fixed mortgage pricing has stayed elevated even as headline inflation has cooled, a disconnect that is likely to dominate the political conversation around the cost of living as Burnham settles into office.

The Burnham Variable

Markets are treating the change in Downing Street as a genuine source of uncertainty rather than a formality. Investors are specifically awaiting fresh policy detail from the new administration on fiscal rules, spending commitments, and its approach to the gilt-issuance programme inherited from its predecessor. Until that detail arrives, strategists expect gilts to trade in a holding pattern, reactive to incoming data — this week’s Bank of England decision chief among them — rather than to political headlines alone.

What to Watch

The Bank of England’s rate decision this week is expected to confirm a hold at 3.75%, but the accompanying minutes and forecasts will be scoured for any signal on how the Monetary Policy Committee is weighing the new government’s early fiscal signals against the growth and inflation outlook. A repeat of the volatility seen during the 2022 mini-budget episode remains the tail risk markets are most keen to avoid.

Gulf investors pulled over $1 billion from Pakistan’s bonds and equities in FY26. Here’s why the Gulf peace deal matters more than headlines suggest.

Pakistan’s economic commentary this year has largely stayed domestic — inflation, IMF reviews, remittances. The more revealing story sits in the balance-of-payments data: Gulf capital, historically one of Pakistan’s most reliable sources of portfolio investment, has gone into reverse at precisely the moment Islamabad is leaning on its Gulf relationships diplomatically.

The numbers

State Bank of Pakistan data show that from July 1, 2025 to June 19, 2026, equity market inflows totalled just $308 million while outflows exceeded $1 billion. Foreign direct investment declined by 28% over the first 11 months of FY26, domestic bonds saw a net outflow of $550 million, and total bond outflows for the year topped $2 billion. Pakistan’s external financing needs are steep: the country must pay over $26 billion in 2026–27, against an $35 billion trade deficit in the first 11 months of FY26.

Between July 2025 and June 2026, foreign outflows from Pakistan’s domestic bonds exceeded $2 billion, while equity market outflows topped $1 billion against just $308 million in inflows. Gulf states have been net sellers, with Bahrain withdrawing $30 million from Pakistani bonds in early FY27 alone, as the US-Israeli war with Iran raised regional risk premiums.

The pattern has continued into the new fiscal year. In the first ten days of FY27, Bahrain withdrew $30 million from Pakistan’s domestic bonds — $21 million from treasury bills and $9 million from Pakistan Investment Bonds — with no Gulf country recording any inflow during the period. Luxembourg was the only recorded foreign buyer, investing $4 million.

Why the peace deal matters disproportionately to Pakistan

Analysts quoted in Pakistani financial press note that Pakistan is not a party to the Gulf war but is now part of the peace framework, which raises the stakes for Islamabad if the deal collapses. Remittances from Gulf countries have so far held up, but bankers warn a prolonged conflict could eventually disrupt what remains the country’s largest source of foreign exchange, alongside stagnant exports and growth capped below 4%.

This sits against a wider regional backdrop: a new UNCTAD World Investment Report finds Gulf outbound investment grew through 2025, but warns that a prolonged conflict could redirect Gulf capital toward domestic reconstruction and strategic infrastructure, reducing the pool available for developing economies in Asia and Africa that increasingly depend on GCC financing — a dynamic that directly implicates Pakistan’s financing model.

The underserved angle

Most Pakistani business coverage frames this as an IMF-and-remittances story. The more precise framing is a capital-substitution risk: Pakistan has structurally relied on Gulf sovereign and institutional capital to plug its external financing gap, and that capital source is now competing for the same money regional reconstruction and Gulf domestic strategic infrastructure would need in a prolonged-conflict scenario. There is a live, underreported counter-current too — SBP data show net FDI actually rose from $54.46 million in April 2026 to $214.29 million in May, suggesting the bond-market flight and the FDI picture are not moving in lockstep.

As US tariffs strain CUSMA, Canada is striking deals with China, Indonesia and the UAE. Here’s how Ottawa’s pivot away from the US is actually unfolding.

Every Canadian trade story in 2026 tends to lead with the same character: Washington. But the more consequential story may be what Ottawa is doing everywhere else. Facing sustained US tariff pressure and uncertainty over the CUSMA review, the Carney government has initiated a strategy to diversify Canada’s international trade, with a specific target of doubling exports to non-US markets by 2035.

Canada’s trade diversification strategy aims to double exports to non-US markets by 2035. In 2025–26 it produced a stabilisation deal with China on EVs and canola, a new trade agreement with Indonesia, a Foreign Investment Promotion and Protection Agreement with the UAE, and consultations with India, Thailand and Mercosur.

The deals nobody outside trade-law circles is tracking

Three moves stand out as substantively new rather than aspirational:

• China: during a visit to Beijing, Canada’s prime minister struck a deal establishing a tariff-rate quota for a set number of Chinese EVs — reverting to pre-2024 tariff levels — in exchange for reduced Chinese tariffs on Canadian canola, lobster and peas. This is a live trade-off between EV protectionism and agricultural market access.
• Indonesia: Canada signed a new trade agreement with Indonesia in 2025, opening a Southeast Asian market largely absent from Canadian export strategy until now.
• UAE: Ottawa launched trade-agreement negotiations and signed a new Foreign Investment Promotion and Protection Agreement with the United Arab Emirates, positioning the Gulf as a capital and market-access partner rather than just an energy counterpart.

Meanwhile, exporter confidence has ticked up but remains below its historical average, and diversification remains concentrated in a narrow set of commodities rather than being broad-based.

Why the gravity model is the real obstacle

Trade economists point to the Gravity Model of trade to explain why diversification is structurally hard: the US economy’s size, physical proximity, regulatory similarity and deeply integrated supply chains with Canada make full substitution unrealistic in the near term, even as China and India are flagged as the two most promising long-term markets given they will account for roughly 45% of global economic growth.

The underserved angle

Most coverage treats “Canada diversifying away from the US” as a single narrative. It is actually three distinct, sometimes contradictory tracks: a commodity-for-EV-tariff trade with China, a market-opening play in Southeast Asia via Indonesia, and a capital-and-investment play with the Gulf via the UAE. Each carries different risk profiles — geopolitical risk with China, execution risk with a new Indonesian relationship, and Gulf capital that is itself increasingly redirected toward domestic reconstruction needs amid regional conflict.