FTSE Closes at 10,620, Up 1.58%; Brent at Three-Month Low Below $90; Gilt Yields at Four-Month Low
UK and European markets closed Monday materially higher. The FTSE 100 closed at 10,620, up 1.58% on Friday’s 10,455 close. Brent crude fell almost 6% to $89.50 a barrel, hitting a three-month low; US crude (WTI) fell below $80 a barrel. UK 10-year gilt yields slipped to 4.86%, at a four-month low and materially below the 5% line. The VIX volatility index fell 11% to 21.80. Sterling strengthened to $1.3490. The Ofgem October price-cap reset window — Brent in the $88-95 range — is now squarely in the operative range. The Bank of England MPC’s decision later this week is materially easier.
The Monday close risk-on follow-through is the structural macro response to the framework signing. The Brent $88-95 band that delivers a flat Ofgem October price-cap reset is now the operative range; Brent at $89.50 sits at the lower bound. The Bank of England MPC’s decision this week is materially easier with Brent at $90 and gilt yields below 5%; Chancellor Rachel Reeves’s fiscal-headroom position is materially eased through the leadership-transition uncertainty. The political-mathematical question for the Chancellor is whether the Burnham continuity-signal positioning crystallises before the post-Makerfield Friday-evening cycle. The Bank of America commentary on Monday afternoon raised the probability of an August Bank Rate cut to 35% from 25% pre-deal.