UK 10-year gilt yields reversed an early rise to fall to 5.20% on Tuesday, their lowest level since September 8, extending an eight-basis-point decline in the previous session. Sterling weakened to $1.336 and the euro fell to $1.145, both near their lowest levels since late July, as investors assessed Middle East developments and weaker-than-expected UK public finances. Brent crude resumed its decline after reports that Iran offered to reopen the Strait of Hormuz within seven days if Washington lifts its military blockade of Iranian ports. The dollar remained supported by expectations of further Federal Reserve rate hikes. UK data showed the August budget deficit widened to £18.3 billion, above the £15.5 billion forecast, while ECB Chief Economist Philip Lane warned that higher energy prices could keep Eurozone inflation elevated for longer, with inflation expected to reach around 4% in coming months before declining toward the ECB’s 2% target from mid-2027. Attention is turning to next month’s Autumn Budget and possible changes to fiscal rules allowing infrastructure borrowing to be excluded.