The yield on UK 10-year government bonds rises to 5.2% as the market increases bets on a Bank of England rate hike.

⑴ The yield on the UK 10-year government bond edged up to 5.2%, as renewed concerns over inflation increased investor expectations that the Bank of England will further raise interest rates in the coming months. ⑵ Brent crude is approaching $100 per barrel, and UK natural gas prices have climbed to their highest level since the end of 2022, influenced by renewed US-Iran tensions and reports that Iran and Oman are nearing an agreement on managing shipping in the Strait of Hormuz. ⑶ Ongoing inflationary pressures and economic resilience are keeping pressure on the central bank to maintain a restrictive policy stance. The market has fully priced in a 25 basis-point rate hike by the Bank of England before December and expects one more increase by March 2027. ⑷ At the same time, investors are evaluating the government’s commitment to fiscal discipline and its plans to restore credibility in the international bond market ahead of the budget announcement on October 28. The government also intends to attract private investment through public institutions to drive regional growth.