Europe’s Bond Markets Bounce Back as Energy Drop Brings Relief

European bonds rebounded on Tuesday as traders seized on a drop in energy prices to dial back the extreme moves seen at the start of the week.

In the UK, bets on the direction of Bank of England interest-rate policy took a U-turn, with traders rekindling expectations for a cut this year instead of the hike that was priced on Monday. Gilts rallied, lowering the yield on two-year notes nine basis points to 3.90%.