British 10-year government bond yields dropped to a three-month low on Wednesday amid a worldwide rally in government bonds that followed a sharp fall in oil prices.
At 1408 GMT the 10-year gilt yield hit 4.676%, the lowest level recorded since March 18, according to LSEG data. That intraday low edged below the prior trough of 4.679% set on April 8. Bond yields move inversely to prices, so the reading reflects stronger demand for gilts.
By late Wednesday the 10-year yield had fallen 7 basis points on the day to 4.69%, moving broadly in line with the trajectory of 10-year U.S. Treasuries. Yields on longer-dated gilts also retreated to their lowest levels since mid-April.
The move in fixed income came after Brent crude oil prices tumbled about 4% to their weakest point since the conflict began at the end of February. The decline in oil extended as a growing number of tankers began transiting away from the Strait of Hormuz.
Market participants noted that Britain’s £2.9 trillion ($3.8 trillion) government bond market appeared relatively unconcerned by reports that Andy Burnham - who appears likely to succeed Keir Starmer as Britain’s next prime minister - could replace finance minister Rachel Reeves. Investors are awaiting specifics on any tax, spending and borrowing plans that a Burnham administration might announce.
The combination of lower oil prices and a global government bond rally contributed to the downward pressure on gilt yields, while political developments in the UK remained a watchpoint for future fiscal guidance.
Summary of movements and context:
- 10-year gilt yield intraday low: 4.676% at 1408 GMT, lowest since March 18 (LSEG data).
- Previous low recorded: 4.679% on April 8.
- Late-session yield: down 7 basis points to 4.69%, tracking 10-year U.S. Treasuries.
- Longer-dated gilt yields: at lowest levels since mid-April.
- Brent crude: down about 4%, lowest since the conflict began at the end of February as tankers moved out of the Strait of Hormuz.
- UK gilt market size referenced: £2.9 trillion ($3.8 trillion); limited market reaction to leadership reports pending policy details.