UK 10-year gilt yields slipped back toward 4.5%, near their lowest level since late January, as markets navigated renewed political uncertainty. Bond markets began the week under pressure following the resignation of Prime Minister Keir Starmer’s chief of staff amid the Lord Peter Mandelson scandal, sparking speculation about Starmer’s own position. Yields swung sharply during Monday’s session, climbing around eight basis points at their peak, particularly after Scottish Labour’s leader called for Starmer to step down. However, sentiment stabilized as cabinet members publicly reaffirmed their support for the prime minister, calming investors. Meanwhile, expectations for Bank of England rate cuts have strengthened. Although the central bank left its benchmark rate unchanged at 3.75% in a split vote, policymakers struck a more dovish tone than anticipated, signaling that CPI inflation is likely to move back toward the 2% target from April.
