UK bond yields fall as oil prices retreat on fresh Iran peace deal hopes
TLT•Oil-rates correlation remains strong
"The correlation between oil and rates remains strong, and even though the latest signs have turned more positive, we'll have to see concrete steps to open the Strait to prevent oil prices from rising again," said Michiel Tukker, senior UK and euro zone rates strategist at ING.
"The relationship (between rates and oil prices) does not show any signs of easing. If anything, the longer oil prices remain elevated, the higher the risk of second-round inflation effects," Tukker added.
UK gilt yields fall as oil prices retreat
LONDON, Aug. 3 (Reuters) - British government bond yields slid on Monday as oil prices dropped sharply by around $4 a barrel after U.S. President Donald Trump said talks with Iran would resume and called off military strikes.
Two-year gilt yields GB2YT=RR — which are sensitive to the near-term outlook for interest rates — sank around 9 bps to 4.325%, a bigger fall than for German or U.S. bonds, and at 0715 GMT had been as low as 4.320%, a level last seen on July 17.
Ten-year gilt yields GB10YT=RR dropped below 5%, falling 8 bps to 4.975%, while 30-year gilt yields were also 8 bps lower at 5.702%.
