Markets Open Calmer on Iran De-Escalation; Bond Markets Watch Burnham Speech
UK and European markets opened Monday in calmer mood after the overnight US-Iran de-escalation. Brent crude fell back to $87.50 a barrel from Friday’s spike. Sterling firmed slightly to $1.3200. The FTSE 100 opened modestly higher at 10,650. UK 10-year gilt yields eased to 4.94%, off the recent peak. The Bank of England’s August rate decision — previously seen as a near-certain cut — is now in genuine doubt. The biggest near-term market mover today is Burnham’s economic speech: any sign of major borrowing or fiscal-rule loosening could push gilt yields back up sharply.
The Monday calm depends on the Iran de-escalation holding through Tuesday’s Qatar talks. If those break down, expect Brent back above $90 and sterling weaker again. Bank of England rate-cut pricing for August has fluctuated between 45% and 55% probability across the week. The Burnham economic speech is expected to detail capital gains tax reform alongside the devolution framework; the structural question is whether the speech provides enough fiscal-credibility detail to anchor gilt-market positioning through July. Bond markets remain wary of any successor to Reeves who might loosen the fiscal envelope.