The UK 10-year gilt yield climbed back to 4.752% on Monday as renewed tensions between the US and Iran unsettled markets. Oil and gas prices surged after the US Navy seized an Iranian vessel and Tehran responded by firing at ships and closing the Strait of Hormuz again, reversing hopes of a reopening. Brent and WTI futures jumped around 6%, erasing much of Friday’s decline. Traders have added roughly six basis points to expectations for Bank of England rate hikes this year, though only one increase remains fully priced in. Political risks are also weighing on gilts as controversy grows over Prime Minister Keir Starmer’s appointment of Peter Mandelson as US ambassador. Starmer is set to address parliament on the issue, while further scrutiny is expected as officials involved in the vetting process prepare to give evidence.
