The Federal Reserve's hawkish words on inflation and expectations that UK rates might rise have pushed the yield on 10-year gilts to a 15-year high, topping the levels seen in the wake of the mini-Budget.
The yield on a 10-year gilt rose as high as 4.7% while two-year bond rates jumped six basis points to 5.27%.
The move follows economic data this week which showed the UK’s core inflation was falling more slowly than hoped while across the pond the US central bank also warned of significant upside risks to inflation.
Figures from the Office for National Statistics showed core CPI (excluding energy, food, alcohol and tobacco) rose by 6.9% in the 12 months to July, unchanged from June, and ahead of forecasts of 6.8%.
There was also an unwelcome jump in services inflation which rose from from 7.2% to 7.4%.
In the US, the 10-year Treasury yield also crept higher once, to 4.29%, approaching the highest level since 2007.
The US Federal Reserve said upside risks to inflation were "significant" and suggested further interest rate increases may be necessary.
"With inflation still well above the Committee’s longer-run goal and the labor market remaining tight, most participants continued to see significant upside risks to inflation, which could require further tightening of monetary policy," minutes from the July Federal Open Market Committee showed.