27.04.202607:56:48UTC+00UK Gilt Yields Near 2008 Highs as Oil Surge Fuels Inflation Fears

UK 10-year gilt yields rose to 4.94%, nearing highs last seen in 2008, as oil prices surged amid an effective closure of the Strait of Hormuz and a breakdown in US–Iran peace efforts over the weekend. Iran offered to reopen the strait and end hostilities, but nuclear talks were subsequently put on hold after US President Donald Trump canceled a planned delegation visit to Pakistan for discussions on Iran.

Investors now face a pivotal week of economic releases and central bank decisions. The Bank of England is widely expected to keep interest rates on hold. This follows last week’s UK inflation report, which showed CPI rising 3.3% year-on-year in March, driven largely by a sharp increase in motor fuel prices. In response, markets have shifted from pricing in a single rate hike this year to expecting at least two, with a possible third.

Political uncertainty is adding to the backdrop ahead of the 7 May local elections. Pressure is intensifying on Prime Minister Keir Starmer over his controversial decision to appoint Peter Mandelson as UK Ambassador to the United States.