UK Gilt Yields Slightly Up as Burnham’s Economic Stance Awaited

UK 10-year gilt yields rose toward 4.75%, bouncing back from two-month lows, as investors await Andy Burnham’s speech for insights into his economic strategy. Burnham, the only declared candidate to succeed Keir Starmer, is expected to advocate for expansionary fiscal policies following his return to Westminster. Investors are also evaluating the impact of an interim US-Iran peace deal and shifting interest rate expectations in both the UK and US. The reopening of the Strait of Hormuz has lowered oil prices and inflation forecasts, prompting markets to reduce bets on Bank of England rate hikes. Meanwhile, Fed Chair Kevin Warsh’s hawkish tone has strengthened expectations of US rate increases this year.

The UK 10-year gilt yield fell to 4.736%, extending declines for a third session to an over two-month low, as weaker UK flash PMI data reinforced expectations of slower economic momentum and reduced the likelihood of Bank of England rate hikes. Political uncertainty also eased after Prime Minister Keir Starmer announced his resignation, with Andy Burnham emerging as the leading candidate to replace him. Attention now turns to Burnham’s potential policy agenda, cabinet choices and the implications for public finances. If no major challenger emerges, Burnham could take office as early as July 17. Meanwhile, June PMI data showed the UK economy remained under pressure, with the composite index falling to 49.4, below expectations and signalling contraction for a second consecutive month. Services activity weakened, while manufacturing held up better. Rising input costs and persistent services inflation remain key concerns for the Bank of England.

The UK 10-year gilt yield fell to 4.78%, extending declines for a second session and moving closer to the two-month low of 4.745% reached on June 17, as weaker UK flash PMI data reinforced expectations of slower economic momentum and reduced the likelihood of Bank of England rate hikes. Political uncertainty also eased after Prime Minister Keir Starmer announced his resignation, with Andy Burnham emerging as the leading candidate to replace him. Attention now turns to Burnham’s potential policy agenda, cabinet choices and the implications for public finances. If no major challenger emerges, Burnham could take office as early as July 17. Meanwhile, June PMI data showed the UK economy remained under pressure, with the composite index falling to 49.4, below expectations and signalling contraction for a second consecutive month. Services activity weakened, while manufacturing held up better. Rising input costs and persistent services inflation remain key concerns for the Bank of England.