UK 10-year gilt yields fall to 5.25% as oil eases toward $100

  • UK 10-year gilt yields declined to 5.25% as Brent crude prices eased.
  • Markets price an 80% chance of a November Bank of England rate hike.
  • The government is reportedly considering extending a new property tax to homes above £1.5 million.

UK 10-year gilt yields fell to 5.25%, staying below the 19-year highs reached earlier this month as Brent crude moved toward $100 a barrel. Comments from US President Donald Trump left room for diplomacy with Iran, helping reduce fears of an imminent supply shock, while stronger regional crude flows eased pressure on physical markets. Traders are slightly reducing expectations for Bank of England rate hikes after policymakers said last week that the inflation and interest-rate outlook will depend heavily on oil and gas prices in coming months. Markets price an roughly 80% chance of a hike at the November meeting and about a 56% probability of a second increase by year-end. Investors are also focusing on next month’s Autumn Budget, with the government reportedly considering extending a new property tax to homes valued above £1.5 million.

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