UK Gilt Yields Hit 19-Year High as Oil Fuels Rate-Hike Bets
UK 10-year gilt yields climbed back above 5.4%, returning to levels not seen since July 2007, as oil prices rebounded and inflation concerns intensified, reinforcing expectations of further interest-rate hikes from major central banks. Brent crude rose above $100 a barrel amid persistent risks to Middle East energy flows, following reports that Iran had intensified attacks on tankers in the Strait of Hormuz in recent days. UK swaps now price in over 100 basis points of Bank of England rate increases by the end of next year. Expectations for the ECB and Federal Reserve have also edged higher, with traders pricing roughly 75 basis points and 85 basis points of hikes over the same period, respectively. Meanwhile, the UK’s party conference season wraps up today, with the budget now just three weeks away. Chancellor John Healey has set Oct. 28 for the fiscal statement, a month earlier than last year, in an effort to limit the time available for policy speculation.
4%, returning to levels not seen since July 2007, as oil prices rebounded and inflation concerns intensified, reinforcing expectations of further interest-rate hikes from major central banks. Brent crude rose above $100 a barrel amid persistent risks to Middle East energy flows, following reports that Iran had intensified attacks on tankers in the Strait of Hormuz in recent days. UK swaps now price in over 100 basis points of Bank of England rate increases by the end of next year. Expectations for the ECB and Federal Reserve have also edged higher, with traders pricing roughly 75 basis points and 85 basis points of hikes over the same period, respectively.
Meanwhile, the UK’s party conference season wraps up today, with the budget now just three weeks away. Chancellor John Healey has set Oct. 28 for the fiscal statement, a month earlier than last year, in an effort to limit the time available for policy speculation.