UK bond vigilantes ride again

The FT News Briefing explores growing financial instability in the UK amid political uncertainty and soaring inflation. UK bond vigilantes are signaling their discontent through a sharp sell-off in gilts, pushing 30-year yields to their highest level since 1998. This pressure is driven by concerns over Prime Minister Keir Starmer's leadership and fears that a potential successor could shift Labour's fiscal policy leftward, increasing long-term debt issuance. Market participants favor health secretary Wes Streeting as the most market-friendly candidate, while Andy Burnham is seen as the most threatening due to his opposition to being 'in hock to the bond market.' Meanwhile, U.S. inflation has surged to 3.8% year-on-year, largely fueled by a more than 50% rise in fuel prices since the Iran war began, costing American households an estimated $37.9 billion in extra gas spending. This inflation spike has derailed expectations of Federal Reserve rate cuts, with economists warning of up to $200 billion in lost GDP. The economic fallout could significantly impact President Trump and the Republican Party ahead of the November midterms. In other news, eBay rejected GameStop's $56 billion unsolicited bid, potentially paving the way for a hostile takeover attempt.