UK Gilt Yields Surge on Rate Hike Bets

2026-07-14 07:37 By Joana Ferreira 1 min. read

UK 10-year gilt yields climbed above 5%, reaching their highest level since May 21, as the Middle East conflict stoked fears that rising energy prices could drive inflation and interest rates higher.

Two-year gilt yields also rose above 4.4%, their highest in nearly two months, after gaining nearly 13 basis points on Monday.

The US military continued strikes against Iran after President Donald Trump reinstated a blockade on Iranian shipping and proposed a 20% fee to guard the Strait of Hormuz, heightening uncertainty over energy flows.

Markets responded by pricing in further Bank of England rate hikes, nearly fully expecting two increases in 2026, with a September hike now fully priced in.

In the US, Fed Governor Christopher Waller warned that the central bank may need to raise rates "in the near term" if inflation remains above the 2% target.

Investors now await remarks from Federal Reserve Chair Kevin Warsh and US inflation data later today.



News Stream
UK Gilt Yields Surge on Rate Hike Bets
UK 10-year gilt yields climbed above 5%, reaching their highest level since May 21, as the Middle East conflict stoked fears that rising energy prices could drive inflation and interest rates higher. Two-year gilt yields also rose above 4.4%, their highest in nearly two months, after gaining nearly 13 basis points on Monday. The US military continued strikes against Iran after President Donald Trump reinstated a blockade on Iranian shipping and proposed a 20% fee to guard the Strait of Hormuz, heightening uncertainty over energy flows. Markets responded by pricing in further Bank of England rate hikes, nearly fully expecting two increases in 2026, with a September hike now fully priced in. In the US, Fed Governor Christopher Waller warned that the central bank may need to raise rates "in the near term" if inflation remains above the 2% target. Investors now await remarks from Federal Reserve Chair Kevin Warsh and US inflation data later today.
2026-07-14
UK Gilt Yields Climb as Middle East Tensions Fuel Inflation Fears
UK 10-year gilt yields rose to 4.91% as oil prices surged after another round of US strikes on Iran, with disputes over the Strait of Hormuz’s status intensifying. The US Central Command reported targeting dozens of sites to weaken Iran’s ability to threaten regional shipping, while Iran announced the strait would remain closed "until further notice." The uncertainty heightened inflation concerns, leading investors to bet on further Bank of England rate hikes, with markets pricing in at least one increase this year and a strong chance of a second. On the political front, Andy Burnham is set to become the new Labour party leader when the leadership contest ends on Friday, July 17, and is expected to be officially appointed as prime minister on Monday, July 20.
2026-07-13
UK Gilt Yields Dip as Oil Prices Retreat
UK 10-year gilt yields fell to 4.89%, retreating from one-month highs and tracking a drop in crude prices as US-Iran peace talks continue despite recent hostilities in the Strait of Hormuz. Earlier this week, Brent crude had surged to two-week highs after US President Trump declared the Iran ceasefire over, though he noted Tehran’s continued interest in a deal. With the UK more reliant on energy imports than many of its neighbors, its markets remain particularly sensitive to oil price fluctuations. Despite the daily decline, gilt yields rose 10 basis points over the week, driven by expectations of a Bank of England rate hike later this year. Money markets are pricing in at least one increase, with a 25% chance of a second. The shift comes as the UK prepares for a leadership transition, with Andy Burnham poised to become the Labour's leader on Friday, July 17, and set to formally assume the role of prime minister on Monday, July 20.
2026-07-10