Key events<\/p>\n
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Closing post<\/p>\n
That\u2019s all for today.<\/p>\n
Jonas Goltermann, chief markets economist at Capital Economics, has a non-too-cheery thought to end the day:<\/p>\n
double quotation markThe surge in long-term Gilt yields over recent weeks owes as much to the rise in energy prices as it does to the UK\u2019s latest political melodrama. On both fronts, it looks increasingly as though things may get worse before they get better.<\/p>\n
Here\u2019s our news story about the swings in the bond market today:<\/p>\n
While our Politics Liveblog has all the key developments:<\/p>\n
Share<\/a><\/p>\n Updated at\u00a012.23 EDT<\/p>\n Spike in bond yields ‘could be worse than the Truss crisis in 2022’<\/p>\n After a rocky session, UK government bond prices were significantly lower as trading drew to an end in London.<\/p>\n That shows that the day of political drama, as Keir Starmer fought off efforts to make him step down, have pushed up UK borrowing costs as the markets anticipated the possibility of a more left-wing successor.<\/p>\n The UK 10-year bond yield, which hit its highest since 2008 this morning at 5.13%, has eased back to 5.1%, up from 5% yesterday (that\u2019s a rise of 10 basis points).<\/p>\n Longer-dated 30-year bond yields hit their highest since 1998 earlier today, at 5.81%, and at 5pm was more than 9bps higher at 5.76%.<\/p>\n After surging on speculation that Starmer could be forced to lay out a departure timetable, yields eased slightly as some cabinet members \u2013 and Labour MPs \u2013 backed him.<\/p>\n However, with several ministers quitting today, the PM still appears in a perilous position.<\/p>\n Kathleen Brooks, research director at XTB, suggests the bond markets could save Starmer, given the dangers of higher borrowing costs for the UK\u2019s public finances.<\/p>\n Brooks writes:<\/p>\n double quotation markThe UK still has the highest borrowing costs of any G7 member, and our yields have risen at the fastest rate since the Middle East war started. Until a challenge from the left of the Labour party is eradicated, or the government embarks on growth-positive economic policy, we do not see UK bond yields substantially falling from here.<\/p>\n The pound has also stabilized, and GBP\/USD is just above $1.35. The market is willing to wait and see but remains extremely sensitive to news out of Westminster. Ultimately, it could be the bond market that saves Starmer, as it\u2019s unlikely bond traders would trust anyone else at this stage.<\/p>\n But, with UK 10-year yields at their highest level since 2008, and 30-year yields back at 1998 levels, the recent upheaval and spike in yields could be worse than the Truss crisis in 2022.<\/p>\n Share<\/a>Dimon says JPMorgan would scrap new UK HQ if bank taxes are hiked<\/p>\n The boss of JP Morgan has indicated that it would scrap plans for a multi-billion pound headquarters in Canary Wharf, if bank taxes were hiked by a successor to Keir Starmer.<\/p>\n Jamie Dimon was asked by Bloomberg TV if JPMorgan would review its plans for the new office in light of recent political instability, and replied:<\/p>\n double quotation mark\u201cNot political instability but if they become hostile to banks again, yes.<\/p>\n I\u2019ve always objected to the fact, we didn\u2019t damage the UK in any way, we paid probably $10 billion in extra taxes by now. I don\u2019t think that\u2019s right or fair. If that happens too much we will reconsider.\u201d<\/p>\n More here<\/a>.<\/p>\n JP Morgan revealed plans to build a 3m sq ft tower in Canary Wharf, which will serve as its new UK headquarters, in November 2025, just hours after Rachel Reeves\u2019s most recent budget.<\/p>\n Share<\/a>FTSE 100 ends day almost flat<\/p>\n Britain\u2019s blue-chip share index has ended the day pretty much where it began!<\/p>\n After a session in which traders watched events in Westminster, as well as the latest US inflation report, the FTSE 100 share index has closed down just 4 points, or 0.04%, at 10,265 points.<\/p>\n Banks were among the fallers, with Lloyds losing 4.3% and Barclays off 3.3%, amid speculation that taxes on the financial sector could be increased by a left-leading successor to Keir Starmer.<\/p>\n Share<\/a>“Gilt markets appear cheap… but that doesn\u2019t mean they can\u2019t get cheaper.\u201d<\/p>\n The jump in UK borrowing costs today means that bond prices have fallen \u2013 so that investors get a better rate of return for holding British government debt.<\/p>\n April LaRusse, head of investment specialists at Insight Investment, warns that UK bonds have \u2018decoupled\u2019 from the rest of the bond market \u2013 if that process continues, prices could fall further, pushing bond yields higher.<\/p>\n LaRusse says: <\/p>\n double quotation mark\u201cWhile the Middle East conflict has pushed bond yields higher across most markets, gilts have now clearly decoupled from the pack.<\/p>\n Investor attention has shifted to domestic political risk, particularly the possibility that a change in leadership could loosen fiscal discipline. In our view, any new leader would move quickly to reassure markets and dampen volatility. The risk is all about timing. A drawn\u2011out or uncertain transition, or even no change at all, keeps speculation alive, and neither outcome is market friendly.<\/p>\n Gilt markets appear cheap at this point, but that doesn\u2019t mean they can\u2019t get cheaper.\u201d<\/p>\n Share<\/a><\/p>\n The pound is trading around its lowest level of the day against the US dollar, at $1.351.<\/p>\n That\u2019s a drop of almost one cent, despite more than 100 Labour MPs have signed a letter saying this is \u201cno time for a leadership contest\u201d.<\/p>\n As our Politics Live blog points out, that means the pro-Starmer camp is outnumbering the anti-Starmer camp \u2013 but only just\u2026.<\/p>\n Share<\/a>Oil up almost 4% today<\/p>\n Away from the bond market, oil is pushing higher.<\/p>\n Brent crude is now up almost $4 a barrel, or 3.78%, at $108.17 a barrel, as hopes of an imminent US-Iran peace deal fade.<\/p>\n Donald Trump\u2019s warning yesterday that the ceasefire with Iran is on \u201clife support\u201d has dented hopes of an end to the conflict and a resumption of oil and gas flows through the strait of Hormuz soon.<\/p>\n The US defence secretary, Pete Hegseth, has told the House appropriations subcommittee on defence today that the US has a plan to escalate its activities against Iran if necessary.<\/p>\n Share<\/a><\/p>\n The UK\u2019s FTSE<\/a> 100 share index is outperforming European rivals today, despite the political crisis in Westminster.<\/p>\n The \u2018Footsie\u2019 is down 0.35%, while France\u2019s CAC has lost 0.7% and Germany\u2019s DAX is down 1.1%.<\/p>\n The DAX and CAC have been more vulnerable to the Middle East crisis than the London market (which contains more \u2018defensive\u2019 stocks, and major oil companies).<\/p>\n Share<\/a>New CEO for City & Guilds Foundation amid investigations City & Guilds Foundation has appointed a new chief executive as the charity navigates an official investigation into its controversial sale of the City & Guilds awarding and training business to PeopleCert last year.<\/p>\n Ben Blackledge is joining from WorldSkills UK, a partnership between education, industry and UK governments to promote vocational training, where he is chief executive.<\/p>\n He arrives as the 148-year-old body is the subject of a Charity Commission statutory inquiry, which launched in January<\/a> and was mirrored a day later by PeopleCert commissioning its own internal investigation<\/a> into the deal.<\/p>\n The appointment also comes as the foundation stands accused of attempting to dodge accountability for a \u201ccatastrophic failure of governance<\/a>\u201d by stalling on launching its own independent inquiry into the \u00a3166m deal, after members voted overwhelmingly last month for the trustee board to trigger what would be the third examination into how the charity privatised its operations.<\/p>\n In an announcement that avoided any mention of the various issues facing the body, Blackledge said:<\/p>\n double quotation mark\u201cI am delighted to be joining the City & Guilds Foundation at such an important and exciting moment. The Foundation\u2019s role has never been more vital, and I look forward to working with the outstanding team, partners and members to apply its 148-year legacy to the challenges and opportunities of today.\u201d<\/p>\n On launching its own investigation, a foundation spokeswoman has previously said:<\/p>\n double quotation mark\u201cThe trustees remain committed to working constructively with members to find a clear and proportionate way forward in the best interests of the charity. We are reviewing options to shape this approach, ensuring we address members\u2019 concerns while avoiding unnecessary duplication with the Charity Commission\u2019s investigation. Our priority is to safeguard the integrity and future of the Institute.\u201d<\/p>\n Share<\/a><\/p>\n Updated at\u00a009.35 EDT<\/p>\n The pound may face \u201cfresh waves of selling pressure\u201d if Keir Starmer is ultimately forced to step down, analysts at UniCredit predict.<\/p>\n However, they don\u2019t think we\u2019ll see the extremes reached during former PM Liz Truss\u2019s premiership in September 2022, when the pound fell to a record low of $1.0327 against the US dollar.<\/p>\n UniCredit add:<\/p>\n double quotation markIn any case, while higher yields might also have provided sterling with some cushion to the downside for now, the further sharp rise in UK long-term yields that we would expect if Starmer were to resign would be unlikely to provide fresh relief to sterling. Rather, it would represent an additional source of concern that would only add to worries about the health of UK public finances.<\/p>\n Share<\/a>Stock market flotations ‘could be derailed’ by Labour leadership fight A source at a second City bank has said everyone in the business and banking community wanted predictability.<\/p>\n They added that there had been \u201cquite positive signals from the City\u201d about chancellor Rachel Reeves\u2019 plans to generate growth, \u201cso for anything to be derailed at this point would be damaging\u201d.<\/p>\n \u201cThe worst thing at the moment would be going through another messy leadership race,\u201d they said, adding \u201cwe don\u2019t want to see what we experienced with the previous [Tory] government\u201d referring to the party\u2019s rotating cast of prime ministers.<\/p>\n They added:<\/p>\n double quotation mark\u201cIf you\u2019re planning for an IPO, for example, you need stability in the markets…There\u2019s been talk of a number of IPOs coming down the track in the UK, and that gets derailed in situations like this.\u201d<\/p>\n [an IPO, or \u2018initial public offering\u2019 is a way of floating on the stock market.]<\/p>\n Share<\/a>US inflation jumps to 3.8% annually<\/p>\n Newsflash: inflation in the US has jumped, as the Iran war drives up costs.<\/p>\n US consumer prices rose by 3.8% in the year to April, and by 0.6% during last month alone, new data from the US Bureau of Labor Statistics shows.<\/p>\n Energy prices jumped by 3.8% in April alone, the report shows, and were up 17.9% on an annual basis, as Americans were hit by surging gasoline prices.<\/p>\n Food prices rose by 0.5% in the month, and by 3.2% over the year.<\/p>\n These price rises may drive up the economic impact of the Middle East conflict triggered by Donald Trump at the end of February, and could also make it harder for US central bankers to cut interest rates soon.<\/p>\n Share<\/a><\/p>\n The UK\u2019s share index of medium-sized companies has also had a bad day, so far.<\/p>\n The FTSE 250 index, which contains firms too small for the FTSE 100, is down 1.2% so far today, or -270 points at 22,536 points.<\/p>\n The FTSE 100, which has more of an international focus, is down 0.5%.<\/p>\n Jason Hollands, managing director at investing platform Bestinvest, says \u201cdomestically focused mid-cap stocks\u201d are particularly exposed today, from fears over the Iran war and the UK\u2019s political crisis.<\/p>\n Hollands explains:<\/p>\n double quotation mark\u201cPresident Trump\u2019s warning that the Iran ceasefire is on \u2018massive life support\u2019 has reignited inflation fears by sending Brent crude oil surging to $107 a barrel, raising concerns that energy-driven price pressures could persist for longer. The UK is particularly vulnerable to higher energy prices because it remains heavily reliant on imported energy, meaning any sustained rise in oil and gas costs quickly feeds through into inflation and economic growth concerns.<\/p>\n \u201cAt the same time, markets are becoming increasingly uneasy about instability within the Labour government, with Sir Keir Starmer\u2019s position appearing increasingly precarious following the rout at last week\u2019s local elections. The bond vigilantes are out in force, clearly worried that any leadership change within the governing party could herald a shift towards more radical economic policies, with greater borrowing or even higher taxes becoming more probable at a time when the public finances are already under intense scrutiny, growth is anaemic, and productivity is weak.<\/p>\n Share<\/a><\/p>\n City consultancy Oxford Economics<\/a> fears 5% 10-year gilt yields are here to stay.<\/p>\n Their chief UK economist Andrew Goodwin explains:<\/p>\n double quotation mark\u201cThe increase in UK government bond yields since the start of the Iran war has been greater than in most other advanced economies.\u201d<\/p>\n \u201cMarkets clearly perceive the UK has a bigger inflation problem and that tighter monetary policy will be needed to limit second-round effects from the energy shock, while political uncertainty has added to pressures at the long end.\u201d<\/p>\n![\"Simon](\"https:\/\/www.newsbeep.com\/us\/wp-content\/uploads\/2026\/05\/Simon-Goodley-004.jpg\")
Simon Goodley<\/p>\n![\"Kalyeena](\"https:\/\/www.newsbeep.com\/us\/wp-content\/uploads\/2026\/05\/Kalyeena_Makortoff,_L.png\")
Kalyeena Makortoff<\/p>\n