LONDON, May 5 (Reuters) – British government bond yields
rose sharply on Tuesday, catching up on a surge in borrowing
costs elsewhere on Monday when UK markets were closed for a
national holiday, as the stand-off in the Strait of Hormuz
escalated.
Yields on UK gilts climbed by between 7 and 9 basis points
across the maturity range in early trade as the latest spike in
oil prices fueled inflation concerns.
Investors are also keeping an eye on local elections on
Thursday which may add to pressure on Prime Minister Keir
Starmer and raise questions about Britain’s future fiscal policy
if he is replaced as leader of the Labour Party.
Financial markets were pricing in two or possibly three
interest rate hikes by the Bank of England by the end of 2026.
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