Britain’s prospective next PM tries to placate bond markets after sell-off, gilts steady

Mayor of Greater Manchester Andy Burnham. Leon Neal | News | U.K. gilt yields steadied on Monday after coming under heavy selling pressure last week, as traders gauge whether a challenge to Prime Minister Keir Starmer's leadership poses a threat to the country's fiscal stability. As bond markets opened on Monday morning, the yield on the benchmark 10-year bond, or gilt, stood at 5.15%, easing by 2 basis points. Last Friday, the yield on 20 and 30-year gilts rose to their highest levels since 1998 . On Monday, the interest rate on the 30-year gilt remained elevated, but also fell 2 basis points to at 5.83%. U.K. borrowing costs have been under pressure since nationwide local elections saw the ruling Labour Party perform badly, promoting calls for Starmer to stand down. Stock Chart Icon Stock chart icon Political turmoil in the U.K. has helped drive borrowing costs to generational highs. Starmer has so far refused to resign, but he now faces potential leadership challenges from several Labour colleagues, including his former Health Secretary Wes Streeting, his former deputy Angela Rayner and Greater Manchester Mayor Andy Burnham. The uncertainty in British politics has put bond markets on edge as investors consider whether a new PM will loosen self-imposed fiscal rules limiting borrowing and spending. Burnham, who is thought to be on the left of his party, looked to reassure investors at the weekend that the U.K. …