13.05.202611:34:36UTC+00UK Gilt Yield Back to 18-Year High on Leadership Contest Fears

The UK 10-year gilt yield rose back above 5.1%, nearing the 18-year high of 5.13% reached in the previous session, after The Times reported that Health Secretary Wes Streeting is preparing to trigger a leadership challenge to remove Prime Minister Keir Starmer. The report erased earlier bond gains, leaving yields broadly flat on the day, though this comes after a 19-basis-point jump over the past two sessions.

Starmer, whose cabinet has remained largely intact despite several junior ministers resigning, has reiterated that he intends to remain in office, even as pressure mounts from multiple ministers and more than 80 Labour MPs calling for his resignation following the party’s poor local election performance.

At the same time, stalled US–Iran talks and the closure of the Strait of Hormuz have kept oil prices elevated. In response, markets are now pricing in nearly three additional Bank of England rate increases by the end of the year.