UK Gilt Yields Extend Decline Ahead of BoE Decision
The UK 10-year gilt yield fell further to around 5.1%, its lowest level since late August, as Brent crude prices tumbled to two-month lows amid expectations that the Trump administration could face mounting political pressure to bring the war with Iran to an end following a Democratic sweep in the US midterm elections. Market sentiment was also supported by a rotation away from technology stocks towards other assets, amid concerns over potential regulatory restrictions on chipmakers. Meanwhile, the Bank of England is widely expected to raise interest rates for the first time since 2023, as persistent inflationary pressures continue to weigh on the economic outlook. However, policymakers may push back against market expectations of further monetary tightening next year. Against this backdrop, expectations for additional rate increases beyond today's BoE meeting have moderated, with traders no longer fully pricing in four rate hikes by the end of next year.
The UK 10-year gilt yield fell further to around 5.1%, its lowest level since late August, as Brent crude prices tumbled to two-month lows amid expectations that the Trump administration could face mounting political pressure to bring the war with Iran to an end following a Democratic sweep in the US midterm elections. Market sentiment was also supported by a rotation away from technology stocks towards other assets, amid concerns over potential regulatory restrictions on chipmakers. Meanwhile, the Bank of England is widely expected to raise interest rates for the first time since 2023, as persistent inflationary pressures continue to weigh on the economic outlook.
However, policymakers may push back against market expectations of further monetary tightening next year. Against this backdrop, expectations for additional rate increases beyond today's BoE meeting have moderated, with traders no longer fully pricing in four rate hikes by the end of next year.