UK Gilt Yields Climb Amid Inflation Concerns

2026-03-05 08:34 By Joana Ferreira 1 min. read

The UK 10-year gilt yield climbed back to around 4.4%, its highest level since February 12, as investor attention returned to inflation risks amid the escalating conflict in the Middle East, now entering its sixth day.

The resulting surge in oil and gas prices has heightened global inflation concerns, prompting investors to scale back expectations for interest-rate cuts by the Bank of England.

Markets now assign only about a 20% probability of a rate cut this month, and anticipate only a single 25-basis-point reduction in borrowing costs over the course of the year.

Meanwhile, the Office for Budget Responsibility lowered its forecast for UK economic growth in 2026 to 1.1%, down from 1.4% projected in November, even before factoring in potential energy-price shocks.

However, growth projections for 2027 and 2028 were revised upward to 1.6% in both years, alongside expectations for reduced government borrowing and more moderate inflation.



News Stream
UK Gilt Yields Slide on US-Iran Deal Hopes
UK 10-year gilt yields extended their decline toward 4.9% as investors scaled back expectations for Bank of England rate hikes in 2026, with optimism over a potential US-Iran peace deal pushing oil prices lower and easing inflation concerns. Financial markets now price in about 50 basis points of tightening, equivalent to two rate hikes, by year-end, down from up to three hikes priced in earlier this month. According to Axios, the White House is close to a one-page Memorandum of Understanding with Iran to end the conflict and begin nuclear negotiations, the closest the parties have been to a deal since the conflict started. Tehran is expected to respond within 48 hours, though no agreement is finalized. Earlier, US President Donald Trump paused escalation plans, citing progress in talks. Attention is also turning to Britain’s municipal elections on Thursday, with polls suggesting a possible setback for Prime Minister Keir Starmer’s Labour Party.
2026-05-06
UK Gilt Yields Fall on US-Iran Deal Optimism
UK 10-year gilt yields eased to 5.0% on Wednesday as hopes of a US-Iran deal pushed oil prices lower, reducing inflation concerns. While US President Donald Trump paused "Project Freedom" in the Strait of Hormuz, citing progress in talks, he maintained the blockade on Iranian ports. Despite the decline, gilt yields remain near 18-year highs, as investors still anticipate potential Bank of England interest rate hikes due to the prolonged Middle East conflict's impact on already above-target inflation and domestic political pressure. Markets are pricing in at least two quarter-point rate hikes from the Bank of England this year, following last month's decision to hold rates steady. Governor Andrew Bailey described the move as a "difficult judgement call," warning of risks in delaying action. Attention is also turning to Britain’s municipal elections on Thursday, with polls suggesting a possible setback for Prime Minister Keir Starmer’s Labour Party.
2026-05-06
UK 10Y Bond Yield Hits Near 18-year High
UK 10 Year Government Bond Yield increased to 5.10%, the highest since July 2008. Over the past 4 weeks, United Kingdom 10Y Bond Yield gained 25.91 basis points, and in the last 12 months, it increased 57.83 basis points.
2026-05-05