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Chancellor faces Budget decisions as oil and gilt yields move higher

In the chancellor's early tenure, 10-year government bond yields rose from 4.9% to about 5.4%, while oil moved from about $75 a barrel to above $100.

Reported · Written up by our desk · Economy

BBC Business reports that Britain’s chancellor, preparing for his inaugural Budget on 28 October, has two major decisions to address amid economic pressures tied to the Iran war and renewed global uncertainty.

According to the report, the need is to judge how long the inflation and higher-rate pressures will last, and to determine how to sustain a modest improvement in economic sentiment even as turbulence continues.

The piece highlights how market conditions have shifted in a short time frame: in the chancellor’s first weeks, oil fell as low as $75 per barrel and the yield on 10-year government bonds was 4.9%, but just over two months later oil has largely traded above $100 and the 10-year yield is around 5.4%.

BBC Business adds that the energy shock could reverse quickly, pointing to earlier in the summer when expectations of de escalation in the US Iran conflict helped drive sharp declines in energy prices and bond yields.

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