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[MARKET ANALYSIS] Gilts in focus as Burnham gets ready for his first day as PM

Burnham's upcoming appointment as PM is raising attention in the gilt market, particularly regarding his potential choice for Chancellor, which could impact fiscal policies.

Newsquawk StaffPublished On the live feed at — 4 more headlines followed before this page went public
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[MARKET ANALYSIS] Gilts in focus as Burnham gets ready for his first day as PM

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  • Global fixed income benchmarks are softer across the board, but are off their worst levels following recent remarks by the Iranian Foreing Ministry spokesperson Baghaei, who noted that negotiations with the US could be pursued based on national interests, that intermediaries have shared messages with Tehran in recent days and that Iran will not abandon talks with the US. This constructive rhetoric by the spokesman comes amid a ninth straight day of strikes between the US and Iran. Iran killed two service members in Jordan and one in Iraq over the weekend, while the US continued to target Iranian military capabilities.
  • Gilts (-20 ticks) are in focus today as Labour leader Burnham is set to become PM. He is to meet the King around noon to accept his appointment and then give his first speech between 12:30-13:00BST in front of 10 Downing Street. Although this will be widely watched, the key will be on who he appoints as the Chancellor. It has been widely touted that the current Home Secretary, Mahmood, will be given the role of Chancellor. Analysts see the 2s-30s curve flattening if Burnham's choice of chancellor aligns with market expectations, given Mahmood is seen as fiscally prudent.
  • Bunds (-12 ticks) follow the broader space higher, given the recent fall in energy prices. This week's focus will be on the ECB policy announcement on Thursday, in which the Bank is expected to keep rates steady at 2.25%, with only a 16% chance of a hike in July. However, analysts continue to see further hikes in 2026, with 22bps priced in for a hike in September.
  • USTs (-3 ticks) have returned to their opening price, trading at the upper end of their 109-00+ to 109-06 range. Not much on the docket this week, given Fed officials are on blackout ahead of their policy meeting.
Context

The softening of global fixed income alongside the developments in US-Iran negotiations is further shaping investor sentiment. How Burnham maneuvers fiscal responsibility could influence UK sovereign debt yields and overall market expectations.

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