UK bond sell-off drives up mortgage rates, Jaguar Land Rover cuts 4,000 jobs, British auto industry faces a perfect storm

⑴ The UK bond market continues to come under pressure, with yields on 10-year and 30-year government bonds rising by about 2 basis points during the day, returning to the multi-year highs reached last week. Yields on German and French government bonds for the same period climbed about 2.5 basis points and approximately 3.3 basis points respectively. Brent crude rose around 1.3% to about $97.6 per barrel, and during the session touched a nearly six-week high at around $98, further intensifying selling pressure in the bond market.⑵ Driven by bond market volatility, the average rate for UK fixed-rate mortgages has noticeably risen, with the two-year fixed rate increasing to approximately 5.63% and the five-year rate rising to roughly 5.68%, both above last Friday’s level. The number of available mortgage products in the market has also decreased from about 7,618 to around 7,485, as some banks have withdrawn offerings for repricing.⑶ UK house prices in August fell about 0.4% year-on-year, marking the first annual decline since November 2023. On a monthly basis, prices were down around 0.2%, lower than market expectations. The drop was particularly pronounced in southern regions, with year-on-year declines of about 1.6% in the Southeast and approximately 1.5% in Greater London. Meanwhile, Northern Ireland saw a year-on-year increase of roughly 6.9%, and Scotland rose about 3.5%, with the north-south divide continuing to intensify.⑷ Jaguar Land Rover announced plans to lay off approximately 4,000 employees worldwide within the next two years, in response to the impact of US tariffs, lasting effects from last year’s cyberattack, and fierce competition from low-cost Chinese automakers. The company’s annual profits plummeted by more than 99% last year, falling to just around £14 million.⑸ A professor at Birmingham Business School warns that the UK automotive industry is facing a near-perfect storm. Layoffs are not just another round of corporate restructuring; if the UK loses its specialized automotive manufacturing capabilities, it may also lose the industrial foundation needed for decarbonization. The Mayor of West Midlands has already announced a rapid response plan of about £500,000 to support retraining and reemployment of affected workers.⑹ UK wholesale natural gas prices surged more than 4% during the day to about 186.8 pence per therm, setting an intraday high not seen since January 2023. Ongoing US-Iran tensions continue to delay expectations for the resumption of Qatari LNG exports through the Strait of Hormuz, while European countries are scrambling to refill inventories before winter. The uncertainty over supply prospects keeps the energy market under sustained strain.