UK long-dated bond prices fall as Starmer's future hangs in the balance

Long-dated British government ​bond prices fell ​on Monday as ‌speculation over ​a leadership challenge to Prime Minister Keir Starmer ramped ‌up following heavy local election losses for the Labour Party last week. Gilt investors are wary that ​any successor to Starmer could further increase ⁠borrowing.

Long-dated British government ​bond prices fell ​on Monday as ‌speculation over ​a leadership challenge to Prime Minister Keir Starmer ramped ‌up following heavy local election losses for the Labour Party last week. The 30-year gilt yield, which ‌moves inversely to the price, rose by more ‌than 5 basis points in early trade to 5.64%. French, German and U.S. equivalent bond yields were ⁠up ​by 1-2 ⁠bps.

The rise in long-dated bond yields in part reflect ⁠concerns around fiscal sustainability. Gilt investors are wary that ​any successor to Starmer could further increase ⁠borrowing. Starmer is due to deliver a speech on Monday ⁠in ​an attempt to shore up support among his lawmakers.

A small but growing number ⁠of them have called for his resignation and investors ⁠are ⁠watching closely for any sign of fracture among his members of his ‌cabinet.