Oil and gas prices fall back to ease inflation concerns; British bonds lead the rise in the European bond market

The Zhitong Finance App learned that British Treasury bonds continued to rise for various terms. As oil and gas prices fell to new intraday lows, the yield on the benchmark 10-year British bond fell by nearly 7 basis points. Earlier reports said that EU officials do not expect the US to ban diesel exports, and that Qatar is holding talks with the US and Iran on the Middle East conflict.

UK 2-year and 5-year Treasury yields, which are more sensitive to policy interest rates, both fell 6 basis points to 4.87% and 4.94%, respectively. German 10-year bond yields fell 5 basis points to 3.59%. The performance of French treasury bonds lagged behind, as the share of French treasury bonds in GDP rose to 119% in June, according to official data.

Traders cut their bets on the central bank's forward rate hike. The interest rate hike pricing for the 2027 December contract showed that the ECB dropped 6 basis points to 92 basis points, and the Bank of England dropped 5 basis points to 110 basis points.

The drop in energy prices to a new low of the day was a catalyst for the current round of the rise in the bond market. Brent crude oil fell sharply after hitting a recent high of more than $115 per barrel and fell below the $95 mark, hitting a new low of more than a month. The decline in oil prices is supported by various sources: first, EU officials do not expect the US to ban diesel exports, and second, Qatar is holding talks with the US and Iran on the Middle East conflict.

Concerns about a ban on diesel exports have previously weighed on the European energy market. The United States is the world's largest exporter of diesel. Diesel exports to Europe are expected to reach 360,000 barrels per day in the third quarter of 2026, a sharp increase from 250,000 barrels per day before the conflict.

Countries such as the United Kingdom and the Netherlands are particularly dependent on US diesel imports. In August, US diesel accounted for 62% to 72% of the total diesel imports between the two countries. Any export restrictions could have a major impact on Europe's energy supply, so statements by EU officials have effectively mitigated market tension.