07.10.202608:55:55UTC+00UK Gilt Yields Rise as Oil Fuels Rate-Hike Bets

UK 10-year gilt yields climbed back above 5.4%, returning to levels last seen in July 2007, as rebounding oil prices and mounting inflation concerns reinforced expectations of further interest-rate hikes by major central banks. Brent crude rose above $100 a barrel amid persistent risks to Middle East energy supplies, following reports that Iran has stepped up attacks on tankers in the Strait of Hormuz in recent days. UK interest-rate swaps now imply more than 100 basis points of additional Bank of England tightening by the end of next year. Expectations for the ECB and the Federal Reserve have also firmed, with traders pricing in around 75 basis points and 85 basis points of rate increases over the same period, respectively. Meanwhile, the UK party conference season concludes today, with the budget now just three weeks away. Chancellor John Healey has set October 28 for the fiscal statement, a month earlier than last year, in an effort to curb the window for policy speculation.