UK government bonds fall on Friday as oil prices rebound and Burnham's election increases political uncertainty
- UK government bonds fell on Friday as a rise in oil prices reignited inflation concerns, while Greater Manchester Mayor Andy Burnham won a parliamentary seat in a special election, heightening UK political uncertainty. The 10-year UK gilt yield rose by 5 basis points to 4.81%, underperforming its European counterparts.
- With the US and Iran postponing negotiations on a permanent peace agreement, and Brent crude prices climbing back above $80 per barrel, global bond markets came under pressure. Long-term UK gilt yields had already been pushed higher by the Iran conflict, and last month reached their highest level since 1998 after Burnham indicated his intention to run for Parliament.
- Burnham's victory in the North of England's Makefield constituency allows him to challenge Prime Minister Keir Starmer's leadership. Peel Hunt Chief Economist Kallum Pickering said this victory "was largely priced in by the market before it happened." He added that, since Parliament does not sit on Fridays, Burnham may be sworn in on Monday. "Today and throughout the weekend, we may only be able to speculate how any challenge will play out."
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