The UK 10-year gilt yield fell to 5.23% on Wednesday, tracking a decline in US Treasury yields following the Democratic sweep in the US midterm elections. A Democratic takeover of the House is seen as reducing the likelihood of further deficit-expanding legislation under the Trump administration, easing concerns over federal borrowing. Meanwhile, investors are positioning for an expected return to monetary tightening by the Bank of England on Thursday, with markets widely anticipating the first interest rate hike since 2023. Inflationary pressures stemming from the Iran war, alongside resilience in the UK economy, have strengthened the case for higher borrowing costs. However, policymakers are expected to push back against market expectations of several further rate increases next year.