UK 30-Year Yields Hit 1998 High as Political Turmoil Deepens

UK 30-year gilt yields surged to their highest level since 1998 on Wednesday, as a deepening political crisis added to concerns about the country's fiscal health. The yield on the 30-year benchmark bond rose as much as 12 basis points to 5.45%, surpassing the previous high set in 1998, according to data compiled by Bloomberg.

The selloff in UK government bonds accelerated as Prime Minister Keir Starmer faced growing calls to resign, with a faction of his own party openly demanding his departure. The political uncertainty comes at a delicate time for the UK economy, which is already grappling with high inflation and sluggish growth. Investors worry that a change in leadership could derail fiscal consolidation efforts and lead to higher borrowing costs. The move in long-dated yields also reflects a broader global repricing of risk, as traders reassess the outlook for interest rates and inflation. Live stock prices and charts on NowPrice show how UK equities are reacting to the bond market turmoil, with the FTSE 100 index under pressure.

Looking ahead, market participants will focus on the upcoming UK GDP data and any signals from the Bank of England regarding its monetary policy stance. A further rise in yields could test the government's fiscal credibility and increase the cost of servicing the national debt. Traders will also monitor political developments closely, as any resolution or escalation could trigger sharp moves in both bonds and equities.