UK long-term borrowing costs hit their highest level since 1998 as the Hormuz crisis raised fears of a longer period of high inflation. Thirty-year gilt yields rose as high as 5.79%, while 10-year yields climbed to 5.11%, close to an 18-year high. The move reflects a sharp shift in rate expectations: before the conflict, traders expected the Bank of England to cut rates to support growth, but they now expect two to three quarter-point hikes this year to counter the inflation threat from oil above $100 a barrel. Higher gilt yields make government borrowing more expensive and could reduce the Chancellor's fiscal headroom, adding pressure on public finances already facing debt interest costs above £100bn a year. Gilts have been the worst-performing major bond market since the conflict began, while investors also positioned for sterling weakness ahead of local elections.