As it happened: Ministers resign as gilt yields at 28-year high
The Westminster political drama rocked the bond markets with gilt yields surging to a 28-year high.
The yield on 30-year gilts surged 13 basis points on Tuesday to hit 5.8 per cent. It comes as nearly 80 Labour MPs have now called for the resignation of the Prime Minister and reports suggest numerous members of the cabinet will also call for a timetable of his exit.
The UK 10-year yield also moved on the news, spiking 10 basis points to 5.1 per cent.
Neil Wilson, UK investor strategist at Saxo Market, said: “We could see a blowout in longer-dated gilts if this turns into a dogfight – political, fiscal and inflationary risks will rise. Markets tend to dislike a lack of certainty over who runs a government.”
Several Labour MPs called for Sir Keir Starmer to go, including four ministers who resigned from their posts.
Some of the movement in bond markets also came from the latest round of tensions in the Iran war after Donald Trump branded the month-long ceasefire between the US and Iran is on “massive life support”.
Brent crude – the international benchmark for oil prices – rose 2.5 per cent to $106 continuing to rattle fears of an energy shock. The FTSE 100 has sank one per cent on the latest moves.
On Sunday, Trump branded a counter-proposal from Iran to re-open the Strait of Hormuz “totally unacceptable” and a “piece of garbage”.
Esmail Baghaei, Iran’s foreign ministry spokesperson, said Tehran’s proposals were “responsible” and “generous”.
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