UK Gilt Yields Jump on Inflation Fears

2026-06-01 14:18 By Joana Ferreira 1 min. read

UK 10-year gilt yields climbed back above 4.9%, recovering from over one-month lows, as renewed US-Iran tensions pushed oil prices higher and intensified inflation concerns.

Iran’s Tasnim News Agency reported on Monday that Tehran would halt negotiations with the US over Israeli strikes on Lebanon and fully close the Strait of Hormuz, accusing Washington of "violating the ceasefire on all fronts." Over the weekend, both sides exchanged proposals to revise a draft deal to extend the ceasefire and reopen the Strait of Hormuz, though progress remained uncertain.

The geopolitical uncertainty prompted investors to modestly raise expectations for further Bank of England rate hikes this year, with markets now pricing in almost two increases, with the first one fully priced in September.

Economically, UK house prices fell 0.6% in May, according to Nationwide, a steeper decline than the expected 0.1% and the largest monthly drop since June 2025.



News Stream
UK Gilt Yields Jump on Inflation Fears
UK 10-year gilt yields climbed back above 4.9%, recovering from over one-month lows, as renewed US-Iran tensions pushed oil prices higher and intensified inflation concerns. Iran’s Tasnim News Agency reported on Monday that Tehran would halt negotiations with the US over Israeli strikes on Lebanon and fully close the Strait of Hormuz, accusing Washington of "violating the ceasefire on all fronts." Over the weekend, both sides exchanged proposals to revise a draft deal to extend the ceasefire and reopen the Strait of Hormuz, though progress remained uncertain. The geopolitical uncertainty prompted investors to modestly raise expectations for further Bank of England rate hikes this year, with markets now pricing in almost two increases, with the first one fully priced in September. Economically, UK house prices fell 0.6% in May, according to Nationwide, a steeper decline than the expected 0.1% and the largest monthly drop since June 2025.
2026-06-01
UK Gilt Yields Rebound as US-Iran Tensions Lift Oil Prices
UK 10-year gilt yields rose to 4.85% at the start of June, rebounding from over one-month lows at the end of May, as oil prices surged amid escalating US-Iran tensions. Both nations continued exchanging strikes, with Iran claiming it targeted a US airbase previously used in an attack on a telecommunications tower on Sirik Island, while both sides cited "self-defense." Over the weekend, they exchanged proposals to revise a draft deal aimed at extending the ceasefire and reopening the Strait of Hormuz, though progress remained uncertain. The geopolitical uncertainty has led investors to modestly increase expectations for further Bank of England rate hikes this year. Economically, UK house prices fell 0.6% in May, according to Nationwide, a sharper decline than the expected 0.1% and the largest monthly drop since June 2025, driven by weakening consumer confidence and the Iran conflict’s impact on energy prices.
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UK Gilt Yields Near April Lows as Inflation Fears Ease
UK 10-year gilt yields hovered at 4.8% at the end of May, near their lowest since April 17 and on track for a 19-basis-point monthly decline, as cautious optimism over a potential US-Iran agreement helped ease inflation concerns. Negotiations to end the three-month war continued, with reports that Washington and Tehran had agreed on a 60-day ceasefire extension to allow formal talks, though President Trump has yet to approve the memorandum of understanding. The bond market also drew support from UK Prime Minister Keir Starmer’s Labour Party suffering local election losses that were not as severe as initially feared. Domestic data further bolstered sentiment, with a cooling labor market, softer-than-expected inflation, and signs of slowing economic activity leading traders to scale back expectations for a Bank of England rate hike.
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