Investors Raise Bets on Bank of England Rate Hikes as Oil Prices Climb
Market Reactions to Oil Price Surge and BoE Rate Expectations
Investor Sentiment and Interest Rate Futures
LONDON, April 29 (Reuters) - Investors upped their bets on Bank of England interest rate hikes later this year as oil prices jumped on Wednesday, a day before the BoE is expected to keep borrowing costs on hold as it awaits clearer signs of the Iran war's economic hit.
Interest rate futures were pricing around 73 basis points of increases - equivalent to almost three quarter-point hikes to the BoE's benchmark Bank Rate - by December, up from about 63 bps on Tuesday.
Impact of Oil Prices on Market Expectations
Oil prices jumped on Wednesday and the Brent contract hit a one-month high after a media report that the U.S. will extend its blockade of Iranian ports, likely prolonging Middle East supply disruptions.
Bond Yields Respond to Economic Uncertainty
Two-year gilt yields - which are sensitive to speculation about changes to Bank Rate - were about 13 bps higher on the day at 4.58% at 1515 GMT, the highest since March 27.
German two-year bunds were up by about 8 bps.
Article Credits
(Writing by William Schomberg, editing by Andy Bruce)
