<div id="readability-page-1">  <p><time datetime="2026-04-17T16:30:18+01:00">    Friday 17 April 2026 4:30 pm  </time>      <span> | </span><span> Updated: </span>   <time datetime="2026-04-17T16:31:30+01:00">    Friday 17 April 2026 4:31 pm  </time></p>         <div>                                                                                                                 Add as a preferred        source on Google                        </div>    <figure>    <div>       </div> <img width="742" height="495" src="https://imageproxy.pbkrs.com/https://www.cityam.com/wp-content/uploads/2024/09/GettyImages-2159995438-e1733828975553.jpg/query-dz03NDI?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" original-src="https://imageproxy.pbkrs.com/https://www.cityam.com/wp-content/uploads/2024/09/GettyImages-2159995438-e1733828975553.jpg/query-dz03NDI"/>  <figcaption>Keir Starmer could be forced to wave goodbye to life in Downing Street sooner than he might like</figcaption> </figure> <p>Bond traders are bracing for the prospect of a surge in gilt yields as uncertainty over the future of Keir Starmer’s term in office could pave the way for a more left-wing successor.</p><p>A Starmer defenestration could be just weeks away amid renewed scrutiny over the botched appointment of Peter Mandelson as Washington ambassador and a high chance Labour will haemorrhage hundreds of councillors at May’s local elections as the party languishes in the polls.</p><p>Any replacement for Starmer is widely viewed as likely to come from the left of the party, triggering rising bond yields as investors reel from a government spending splurge.</p><p>In an interview with <em>City AM</em>, Mike Bell, head of market strategy at RBC BlueBay Asset Management, said: “If you look at the bookies at the moment, they’ve got [Angela] Rayner as the favourite – that’s clearly a shift to the left relative to a kind of more center left government at the moment.</p><p>“It’s possible that under a more left leaning government, you get a combination of tax increases as well as more spending.</p><p>“I think markets will assume that you’ll have some fiscal loosening in that position. And with that you could potentially see gilt yields rise.”</p>               <span>Play Video</span>             <h2 id="h-bond-yields-highest-in-the-g7"><strong>Bond yields highest in the G7</strong></h2><p>UK government bond yields are already the highest in the G7, thanks to a combination of higher inflation, higher central bank interest rates and the UK’s sizable exposure to the economic fallout from the war in Iran.</p><p>Earlier this week the government’s Debt Management Office (DMO) sold 10-year bonds at the highest yield since the global financial crisis.</p><p>But a more radical left-wing government could add an additional risk premium to UK bonds, pushing yields up further still.</p><p>“If the government does come out with a material fiscal package by breaking its fiscal rules, then that would obviously mitigate some of the growth shock,” said Cosimo Codacci-Pisanelli, a managing director in EMEA interest rate product sales at Goldman Sachs.</p><p>“And I think we would be in a very bearish rates environment again and flip back to talking about fiscal sustainability and the possible risks of a bond market tantrum of some kind.”</p> </div>

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<p>Bond traders are preparing for a potential rise in gilt yields due to uncertainty surrounding Keir Starmer's leadership, with speculation of a leftward shift in the Labour Party. Analysts suggest that a more left-leaning successor could lead to increased government spending and tax hikes, further impacting bond yields. Current UK government bond yields are already the highest in the G7, influenced by inflation and interest rates. A radical fiscal approach could heighten risks in the bond market, prompting concerns of a market tantrum.</p>

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‘Bond market tantrum risks’: Gilt traders brace for Labour leftward pivot as Starmer future uncertain