UK government bond yields fell to five-week lows on Tuesday as investor concerns about political developments eased and optimism for a U.S.-Iran peace deal helped scale back expectations for interest rate hikes.
The benchmark 10-year UK gilt yield stood at 4.85% as markets returned from a bank holiday.
The decline in yields reflects a shift in following a period of heightened political uncertainty.
With renewed hopes for a diplomatic resolution in the Gulf region, investors are reassessing the likelihood of aggressive monetary tightening.
This has led to a notable easing in bond market conditions, with UK gilts benefiting from the reduced risk appetite.
The broader context includes recent volatility in global bond markets, driven by fears of resurgent inflationary pressures and renewed hostilities in the Gulf.