UK Bonds Dive, Pound Falls – A Political Roller‑Coaster
Breaking the calm: “The market hit a low point not seen since 2022,” some traders whispered as the UK’s 10‑year government bond skyrocketed to 4.68% – the biggest jump since October 2022’s mini‑Budget scare.
Why the chaos? Sir Keir Starmer spat out a no‑go to the Chancellor’s job security, and the pound couldn’t keep its dignity. The currency slipped over 1% to $1.3589, turning the pound into a teetering yo‑yo.
Prime Minister’s Questions (PMQs) – A Comedy of Errors
During PMQs on Wednesday, Rachel Reeves looked “absolutely miserable” and even shed a tear. The spectacle made the room feel more like a soap opera than a governance forum.
Market Reactions in One Snapshot
- 10‑year gilt +22bp (largest one‑day jump since Oct 2022)
- Domestic mid‑cap stocks slipped – investor confidence on a diet
- Pound down 1% – coffee shop money now a little lighter
What’s Next?
With the bond market clouds still gathering and political drama in the foreground, investors are holding onto their breath. The question remains: will the pound call a comeback or settle into a new low‑stability routine?
Headwinds hit UK growth prospects in another blow for Rachel Reeves
Stride says Reeves ‘has been a disaster as Chancellor’
Rachel Reeves days are numbered
Reeves in a State of Crisis: Starmer Dodges the “Job Safe” Question
When the Robin Hood of the UK Treasury, Michael Reeves, tried to reassure the sterling‑swinging market that his position was secure, Keir Starmer gave the shrug that would make Steve Harvey blush.
Reeves, a portfolio veteran from Twentyfour Asset Management, looked disabled, and even managed to recruit a sob‑emoji via text. “I’m in tears,” he told reporters, “and I thought every politician had a survival instinct. Apparently, we’re all just…??”
Stephen & Co. on the Front of the Gilt Curve
- Gordon Shannon (Twentyfour): “The lab is cold and the fisc is messy—Labour’s core message seems like a hiccup in the hummingbird’s diet.”
- Chris Scicilluna (Daiwa Capital): “The market is rewriting the fiscal policy story. The gilt curve is getting a new version—steeper, tighter, and full of prophets.”
- Neil Wilson (Rabobank): “Yields were spinning. Reeves lost his cool at PMQs. Spin or not, the market crashed.”
Why the UK Gilt Yields are Flipping Fast
The National Bank of the UK has been polishing its QT (quantitative tightening) policy and is expected to stop asset sales in autumn. If the government doesn’t “breathe easy” by arriving with the right fiscal 2‑pointers, the market’s war‑games will only get louder.
Going Forward
- Expect Starmer to keep his promises in mystery form.
- Market watchers should watch the gilt curve for a “3‑step and a run” trajectory.
- Listeners to PMQs should probably bring a calming playlist, not a Gartner report.
End of day: People are still clutching their wallets, watching Reeves flee the podium, and waiting for Starmer’s next move. Here’s hoping the next update comes with a promise, a handshake, and possibly a joke about the market’s “clumsy dance.”
