The surge in the yield of gold-plated products is not only related to the UK economy

This is a report from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open provides investors with information on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

US jobs report
The US non-farm payrolls report for December will be released later on Friday. Economists expect it to show an increase of 155,000 jobsdown from 227,000 in November, and the unemployment rate will remain unchanged at 4.2%. Analysts from Goldman Sachs and Citigrouphowever, I think both numbers will be worse than the consensus forecast.

US markets dark, European markets close higher
US markets were closed on Thursday in honor of former US President Jimmy Carter, who died at the end of December at the age of 100. Asia-Pacific markets fell on Friday. Japan’s Nikkei 225 index fell about 1%, leading losses in the region, as data showed household spending fell less than expected in November. China’s CSI 300 lost 1.25%, followed by the People’s Bank of China suspended purchase of bonds.

Chinese 10-year bond yields hit all-time lows
Since December, Chinese sovereign bonds have edged higher with yields on 10-year notes fell to an all-time low this month after falling about 34 basis points, according to LSEG data. Demand for credit from consumers and businesses in China was lackluster, prompting banks to scoop up government bonds, which boost yields.

Fed governor says December tapering should be ‘last step’
This was stated by the head of the US Federal Reserve System, Michelle Bowman December interest rate cut should be his “last step in the policy recalibration phase.” This suggests that Bowman, who is a voting member of the Federal Open Market Committee, may oppose further cuts this year. Other Fed officials speaking this week were more optimistic about a rate cut.

(PRO) UK Small and Mid Cap Stocks to Buy
There may be questions about the strength of the UK economy right now. But Barclays continues to see investment opportunities in the country, naming three small- and mid-cap stocks it is now betting on, with two of them having expected growth above 40%.

The cost of long-term borrowing for the UK government is currently flat for almost three decades. As of 6 a.m. London time, yields at 30-year gilding was 5.359%, the highest level since 1998.

Yields on gilts – a fancy British term for government bonds such as US Treasuries – rose after the UK’s Debt Management Authority on Tuesday sold by auction 2.25 billion pounds ($2.83 billion) worth of gilts with a maturity of 30 years.

Typically, bond yields rise in response to higher interest rates, which remain high when inflation remains stubbornly above most central banks’ 2% target.

This is a problem in the UK. Headline inflation rose to 2.6% in Novemberon an annual basis, the second consecutive monthly increase.

Worse, in October, the gross domestic product of Great Britain down 0.1% monthly, raising the specter of stagflation – when an economy struggles with high inflation and a stagnant economy.

Labor government plans tax hikes and a significant increase in borrowing have also put pressure on gilt prices, which are moving in the opposite direction to yields.

Also consider currency movements. Higher government bond yields often lead to a stronger currency because the yield attracts global investors, who stimulate demand.

The British poundhowever, fell against the US dollar even as gold yields rose.

Taken together, these factors paint a picture of a weak economy, so it seems natural for investors to demand higher returns when they borrow money from the UK government.

But do not exaggerate the situation. Consider Liz Truss disastrous”mini budget” of 2022, which caused massive sale in sausages and a jump in yields in a matter of days (yields usually move at a glacial pace).

In that period of Art The yield on the 30-year US Treasury bond was about 3.5%. It was at 4.9% on Friday, meaning gilts are keeping pace with Treasuries rather than running rampant. In other words, the recent rise in gilt yields is not necessarily due to turmoil in the UK as bond yields, interest rates and inflation concerns remain high around the world.

It’s always scary when a country’s financial markets experience devastation. If others are facing the same problems, it might make the script a little easier to handle.

— CNBC’s Chloe Taylor, Jenny Reid, Karen Gilchrist and Elliott Smith contributed to this report.