FX.co ★ UK Gilt Yields Near April Lows as Inflation Fears Ease

UK 10-year gilt yields hovered just above 4.8% at the end of May, close to their lowest level since April 17 and heading for a 19-basis-point decline over the month. Yields fell as cautious optimism over a potential US-Iran agreement helped ease inflation concerns. Negotiations to end the three-month conflict continued, with reports suggesting Washington and Tehran had agreed to a 60-day ceasefire extension to enable formal talks, although President Trump has yet to approve the memorandum of understanding. The bond market also found support in the performance of UK Prime Minister Keir Starmer’s Labour Party in local elections, where losses were less severe than initially feared. Domestic data added to the positive tone, as evidence of a cooling labour market, softer-than-expected inflation, and slowing economic activity led traders to scale back expectations of a Bank of England rate hike.