UK Gilt Yields Steady as BoE Rate Hike Bets Intensify
The yield on 10-year UK government bonds stabilized around 5.2% following the previous session’s selloff, as investors assessed a quiet economic calendar and stronger-than-expected US inflation data, which reinforced expectations of further Fed tightening. Brent crude also paused its recent decline amid renewed shipping tensions in the Strait of Hormuz. Meanwhile, expectations of further BoE tightening have increased, with markets leaning towards another rate hike in December. Deputy Governor Clare Lombardelli warned that consecutive increases remain possible, highlighting persistent wage pressures and the risk of second-round inflationary effects. Investors are now increasingly pricing in another hike before year-end and a further increase by March, potentially putting renewed pressure on gilts. Investors are now turning their attention to UK third-quarter GDP report due Thursday.
The yield on 10-year UK government bonds stabilized around 5.2% following the previous session’s selloff, as investors assessed a quiet economic calendar and stronger-than-expected US inflation data, which reinforced expectations of further Fed tightening. Brent crude also paused its recent decline amid renewed shipping tensions in the Strait of Hormuz. Meanwhile, expectations of further BoE tightening have increased, with markets leaning towards another rate hike in December. Deputy Governor Clare Lombardelli warned that consecutive increases remain possible, highlighting persistent wage pressures and the risk of second-round inflationary effects.
Investors are now increasingly pricing in another hike before year-end and a further increase by March, potentially putting renewed pressure on gilts. Investors are now turning their attention to UK third-quarter GDP report due Thursday.