The yield on the UK 10-year government bond rises above 4.8% as oil prices increase and expectations of interest rate hikes drive gains.
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(1) The yield on the UK's 10-year government bond climbed above 4.8%, reaching its highest point since June 19, as the attack on ships in the Strait of Hormuz pushed up crude oil prices. (2) Renewed tensions in the strait drove crude oil back above $72 per barrel, the highest level since early July, further intensifying inflationary pressures. (3) Traders increased their bets on a Bank of England rate hike, with the probability of a rate hike by year-end at 76% and over 50% for a November hike. (4) Bank of England Governor Bailey recently reiterated that inflation will still return to the 2% target, although later than previously expected, and ruled out the possibility of a rate cut in the near term. (5) Politically, Burnham, the frontrunner to succeed Starmer as Prime Minister, has yet to appoint a Chancellor of the Exchequer, with former Energy Secretary Miliband as a possible candidate.
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