The UK government bond yields have fallen, the US has dropped tariff threats, and the UK's public finances have improved.

The yield on UK government bonds fell, driven by improved market sentiment after the US abandoned plans to impose tariffs on European countries. The initial plan for the US to impose tariffs was due to these countries resisting its plan to purchase Greenland. UK government bonds were also boosted by signs of improvement in the UK's public finances. Data shows that public sector borrowing in December was 11.6 billion, better than the average expectation of 13.7 billion from economists. Yields had risen on Wednesday, as concerns about a possible trade war between the US and Europe dominated the market before US President Trump's speech in Davos. Tradeweb data shows that the yield on UK 10-year government bonds fell by 2 basis points to 4.425%.