The yield on UK 10-year government bonds declined slightly as the market focuses on budget and policy outlook.

(1) The yield on the UK's 10-year government bonds edged down to 5.4%, following the decline in US Treasury yields. (2) Investors welcomed the International Monetary Fund's upward revision of the UK's growth forecast, with the organization now expecting UK GDP to grow by 1.3% this year, higher than the July projection of 1.0%. (3) Markets are focused on the budget announcement by Chancellor John Healey later this month. Previously, the Institute for Fiscal Studies warned that the government needs to raise £35 billion to meet its spending targets, sparking speculation about potential tax increases. (4) In terms of monetary policy, Bank of England hawkish policymaker Megan Greene believes stronger-than-expected growth and a resilient labor market indicate that interest rates should remain above the current 3.75% to control inflation. (5) Market pricing indicates four rate hikes over the next 12 months, but many analysts consider this outlook excessive, as several policymakers already believe current interest rates are above the neutral level.