FX.co ★ UK 10-Year Gilt Yields Drop Further

The yield on the UK 10-year gilt eased to 4.81% after rising over the previous two sessions, as markets responded to Prime Minister Keir Starmer’s resignation and early fears of a highly disruptive leadership transition began to subside. Starmer’s departure followed Greater Manchester Mayor Andy Burnham’s by-election win last week, which marked his return to Parliament. Burnham has since announced his intention to seek the premiership. Confidence in a relatively orderly succession firmed after Wes Streeting, previously seen as a potential rival, publicly backed Burnham’s bid. Investors are now concentrating on the implications for the UK’s fiscal trajectory and on Burnham’s still largely undefined fiscal policy agenda. A central concern is the risk of increased gilt issuance to fund higher public spending, which could put additional pressure on the UK’s already fragile public finances and elevated debt burden.