[MARKET ANALYSIS] Yields climb as energy benchmarks soar, sparking a hawkish move in central bank pricing

A bearish start to the week for benchmarks as yields react to energy prices. See the 08:25GMT update for a full geopolitical brief, but in brief, the ongoing Middle East conflict, supply/production disruptions, and no clear signs that the US or Iran are set to back down have lifted crude to above USD 100/bbl, a level not seen since 2022.
This saw USTs begin the week with losses of nearly 20 ticks, Bunds down by over 90 ticks and Gilts gapping lower by 119 ticks at a 88.80 trough, just above the 88.52 contract base.
For the UK, the move lifted the 10yr yield to a 4.78% peak, the highest since October 2025 and takes us back to the September 2025 peak of 4.86%. Action that has seen a marked shift in BoE repricing, with markets implying around a 70% chance of a hike by the end of 2025; a marked shift from mid-February, when two cuts were essentially priced. Note, this move will likely moderate as while easing is likely off the cards in the near-term, the UK's job market situation does not support tightening in the near term.
Back to USTs, the benchmark is lower by around 15 ticks as it stands, just off a 111-26+ base. The day ahead is focused entirely on energy, with a G7-IEA meeting expected at 12:30GMT to discuss a potential strategic release.
For Bunds, they are also off worst and by quite some way. Down by around 25 ticks currently, but around 70 off a 125.94 trough. A moderation that has perhaps come as the benchmark finds some modest haven allure given the broader risk tone. Additionally, a rethinking of ECB pricing from the knee-jerk this morning may be factoring; at most, markets priced in two 25bps hikes by the ECB in 2026.