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UK Political Turmoil Rattles Bond Markets as Leadership Challenge Looms

Bond traders are monitoring UK political developments closely as Prime Minister Keir Starmer faces potential leadership challenges. Health Secretary Wes Streeting is expected to resign and launch a bid against the premier as soon as Thursday. Former deputy Angela Rayner, cleared of wrongdoing over tax matters, is also considering a challenge. Greater Manchester Mayor Andy Burnham represents a third contender, with supporters pushing to extend parliamentary timelines to allow him to secure a seat. A Labour leadership election requires either the leader's resignation or nominations from 81 Labour MPs. Market observers note that Rayner and Burnham's leftward positioning has unsettled investors concerned about increased public spending and borrowing. Benchmark gilt yields remained flat in early Thursday trading.