UK borrowing costs have hit an 18-year high as gilt yields top 5%, prompting banks to pull mortgage deals. Traders bet inflation will prove stickier and rates stay higher for longer, lifting swap costs. The squeeze threatens the housing market and piles pressure on the PM and chancellor.

Global markets slid as investors priced in a prolonged energy shock linked to a geopolitical crisis. Oil and European gas jumped, inflation risks mounted and bond yields rose. Central banks cautioned that price pressures may persist, lifting expectations of faster tightening across the West.

US rates were kept on hold, but the Fed signalled it still aims to cut later this year despite a jump in oil prices. Powell said inflation is easing, though geopolitical risks cloud the outlook. Markets read the guidance as steady progress towards loosening, contingent on data.

The head of the US counterterror centre resigned, revealing splits in Trump’s circle over policy on Iran. He said there was no imminent threat and criticised lobbying influence. The departure raises doubts about strategy and pressures Washington and allies to seek restraint.