UK 10-year gilt yields slipped to 5.25%, staying below the 19-year highs reached earlier this month. The move came as Brent crude retreated toward $100 a barrel, after recent comments from US President Donald Trump left room for potential diplomatic engagement with Iran, easing concerns over an imminent supply shock. Stronger regional crude flows have also helped alleviate pressure in physical markets.
In response, traders are slightly scaling back expectations for further Bank of England rate hikes. Policymakers signaled last week that the inflation and interest-rate outlook will hinge heavily on the trajectory of oil and gas prices over the coming months. Markets now assign around an 80% probability of a rate increase at the November meeting, with the odds of a second hike by year-end at roughly 56%.
At the same time, investors are turning their focus to next month’s Autumn Budget, amid reports that the government is considering extending a new property tax to include homes valued at more than £1.5 million.
