Barclays: Political Risk May Add Pressure on UK Government Bonds

Barclays analysts said UK government bond yields faced a risk of rising further due to political uncertainty. According to Jin10, the analysts wrote in a report that the UK was waiting for a new prime minister after Keir Starmer stepped down in June, a period they said carried political risk. The report said that if no other candidates within the Labour Party challenge, the market broadly expected Andy Burnham to replace Starmer on July 20. The analysts added that the UK’s weak public finances could pose a challenge for the incoming prime minister. The report also noted that global bond yields had generally risen amid escalating tensions in the Middle East, and that UK gilt yields had increased more than comparable euro zone government bonds.