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UK Political Turmoil Rattles Bond Markets as Labour Leadership Race Intensifies

Bond traders braced for continued volatility Thursday as Prime Minister Keir Starmer faced mounting pressure from potential Labour Party challengers. Health Secretary Wes Streeting resigned midday, stating he no longer backs the premier following last week's significant local council election losses. Streeting's departure signals an imminent leadership bid. Former deputy Angela Rayner, recently cleared of tax wrongdoing allegations, is also positioning herself as a contender. Greater Manchester Mayor Andy Burnham represents a third option, with supporters pushing the party to extend leadership election timelines so he can secure a parliamentary seat first. A leadership election requires either the leader's resignation or backing from 81 Labour MPs. Investors fear a left-leaning successor would increase government borrowing and spending, driving gilt yields higher.