UK bond yields rise further, with Scottish Labour leader to call on Starmer to stand down
UK borrowing costs are pushing higher, as pressure continues to mount on Keir Starmer.
The yield, or interest rate, on 10-year government bonds is now up 7 basis points (0.07 percentage points) to 4.59%, as gilt prices continue to drop.
That’s close to the two and a half-month high touched last week.
30-year bond yields are now up almost 8 basis points to 5.41%. That’s the highest level since mid-November, just before Rachel Reeves’s budget.
Yields have pushed higher following news that Anas Sarwar, the Scottish Labour leader, is to call on Keir Starmer to stand down as prime minister and Labour leader.
Key events
Closing post
Time to recap.
It’s been a volatile day in the UK bond market as pressure has built on Sir Keir Starmer.
UK borrowing costs rose in early trading as traders reacted to Sunday’s resignation of the prime minister’s chief of staff, Morgan McSweeney, over the decision to appoint Peter Mandelson as ambassador to Washington.
Bond yields rose further after the Downing Street communications director Tim Allan resigned on Monday morning….
… and long-term borrowing costs touched their highest level since November, after it was reported that Anas Sarwar, the Scottish Labour leader, was calling on Starmer to stand down as prime minister and Labour leader.
But! Yields then dropped back, after a flurry of supportive messages from government ministers, indicating that Starmer has not lost the cabinet’s support.
The pound fell against the euro, but was stronger against the US dollar.
Japan’s stock market has hit a record high after Sanae Takaichi’s Liberal Democratic party (LDP) secured a comprehensive victory in Sunday’s election.
Japan’s Nikkei share average rose to a record high on Monday, after the election result, surpassing the 56,000 level for the first time at the start of trading. It quickly pushed through the 57,000-point mark, before closing up 3.9% at 56,363 points.
In other Asian markets, South Korea’s Kospi rose 4.4%, Hong Kong’s Hang Seng gained 1.8%, and Australia’s S&P/ASX 200 was 1.9% higher.
On the currency markets, the yen initially fell 0.3% against the dollar – its weakest level in two weeks – before strengthening as much as 0.7%. It was last trading 0.5% firmer at 156.43 yen against the dolla
Sterling extended losses against the euro this afternoon, nearing a year-to-date low as news emerged that Scottish Labour leader Anas Sarwar called on prime minister Keir Starmer to resign, reports Neil Wilson, investor strategist at Saxo UK:
It should be noted that Sarwar is not an MP and therefore has no direct mechanical influence on the Parliamentary Labour Party in Westminster. And Downing Street is standing firm, reiterating Starmer’s five-year mandate from the general election. Yet it underscores the precarious situation the prime minister is facing.
Starmer is due to speak to Parliamentary Labour Party at 6pm, which could be a pivotal moment if he is to survive this week. It follows the resignation of the PM’s chief of staff over the weekend and director of communications today.
The market is worried about a) political uncertainty with a vacuum at the top against a backdrop of acure economic and geopolitical challenges, and b) that any replacement of the Starmer-Reeves regime would be from the left, implying more spending and potentially unwinding all the fiscal repairs carried out at the last Budget. Incidentally, it’s this fear of an attack by bond vigilantes that just might save the PM, though it’s looking increasingly less likely he will survive as Labour leader by the May elections.
Energy secretary Ed Miliband, and Scottish secretary Douglas Alexander, have also voiced support for Starmer:
Keir has earned the right to deliver the change he has promised and do what he cares about – which is to serve the country.
This is not the time for the government to turn inwards on itself. We must focus on delivering the change we promised the country.
— Ed Miliband (@Ed_Miliband) February 9, 2026
Yields dip back after cabinet support for Starmer
UK borrowing costs have dropped back from their earlier highs, after that chorus of support from members of the cabinet for Keir Starmer.
Yields are still higher than on Friday, suggesting investors still see British debt as slightly riskier.
But, the yield on 10-year UK bonds is now up by 4 basis points, having been 7bps higher earlier. 30-year bond yields are also up 4bps, reversing around half of their earlier jump.
Sky News are reporting that British health minister Wes Streeting has said Keir Starmer did not need to resign, and that the prime minister should be given “a chance”.
Supportive fire has come in from John Healey, the Secretary of State for Defence, too:
The British public gave Keir a huge mandate only 18 months ago.
They wanted a Labour government. They want us to deliver the change we promised. They expect us to get on with the job.
The PM has my fullest support in leading this government and this country.
— John Healey (@JohnHealey_MP) February 9, 2026
Chancellor Rachel Reeves has voiced her support for the embattled PM:
Rebuilding Britain takes time. But thanks to the decisions we’ve made NHS waiting lists are falling. Inflation is falling. Interest rates are falling. The conditions for the economy to grow are there.
With Keir as our Prime Minister we are turning the country around.
— Rachel Reeves (@RachelReevesMP) February 9, 2026
UK borrowing costs have dipped back a little, after deputy prime minister David Lammy and housing minister Steve Reed both pledged their support publicly for Prime Minister Keir Starmer in posts on X:
Keir Starmer won a massive mandate 18 months ago, for five years to deliver on Labour’s manifesto that we all stood on.
We should let nothing distract us from our mission to change Britain and we support the Prime Minister in doing that.
— David Lammy (@DavidLammy) February 9, 2026
Keir led our party to victory and won a mandate for change. Waiting lists are falling, wages are rising, new rights for renters and leaseholders. We need to stay the course and deliver the change this country voted for.
— Steve Reed (@SteveReedMP) February 9, 2026
Anas Sarwar, the Scottish Labour leader, is holding a press conference now, where he is calling for the leadership in Downing Street to change.
Andrew Sparrow’s Politics Live blog is covering all the action:
“Fears of more left-wing government” hit pound
The pound is continuing to drop against the euro too.
Sterling is now down two-thirds of a eurocent at €1.1447.
Enrique Diaz-Alvarez, chief economist at global financial services firm Ebury, blames “fears of more leftwing Labour government”, and rising expectations of further cuts to UK interest rates:
Diaz-Alvarez says:
Fears about the future of Keir Starmer’s leadership returned last week due to fallout from the Epstein scandal. Combined with the Bank of England’s apparent dovish turn, this made for a rough week for sterling.
“We expect that the MPC’s dovish rhetoric will affect the timing of cuts more than their total size, and the terminal rate will see little change. It now appears to be a coin-toss between the March and April meetings, with a total of two rate reductions largely priced in by swap markets.
“The tone from economic releases has also taken a positive turn over the last few weeks.
“Overall, we think the recent drop in the pound fairly reflects the risks associated with an end to Starmer’s leadership. However, the risk of a leftist turn in the government, particularly under an Angela Rayner led Labour Party, presents downside risks to the pound and British assets generally.”
UK bond yields rise further, with Scottish Labour leader to call on Starmer to stand down
UK borrowing costs are pushing higher, as pressure continues to mount on Keir Starmer.
The yield, or interest rate, on 10-year government bonds is now up 7 basis points (0.07 percentage points) to 4.59%, as gilt prices continue to drop.
That’s close to the two and a half-month high touched last week.
30-year bond yields are now up almost 8 basis points to 5.41%. That’s the highest level since mid-November, just before Rachel Reeves’s budget.
Yields have pushed higher following news that Anas Sarwar, the Scottish Labour leader, is to call on Keir Starmer to stand down as prime minister and Labour leader.
The yen is continuing to strengthen against a generally weaker US dollar.
Japan’s currency is now up 0.7% at ¥156.1 to the US dollar, up from ¥157.2 on Friday night.
That’s despite predictions that Japan’s fiscal policy will now become more looser and more expansionary.
Daniele Antonucci, chief investment officer at Quintet Private Bank, explains:
Japan’s snap election delivered one of the largest parliamentary majorities in decades, sharply reducing near-term political uncertainty.
The scale of the mandate increases the likelihood that fiscal policy will become more expansionary over the coming quarters.
Unlike past stimulus episodes, the focus is likely to be targeted, with spending aimed at strategic sectors such as AI, semiconductors and defence.
That raises the probability of higher public investment and stronger incentives for private-sector capital expenditure.
Japanese equities have reacted positively, particularly in technology, machinery and defence-linked names.
This adds to Japan’s relative equity outperformance we’ve seen over the past few months though at the same time valuations have now become more demanding.
At the same time, expectations of looser fiscal policy are putting renewed downward pressure on the yen.
Today’s impressiver near-4% jump on the Japanese stock market follows some strong gains in recent months, points out Russ Mould, investment director at AJ Bell:
“Japanese shares rallied after Sanae Takaichi’s landslide election win. Investors are excited at the prospect of economic stimulus measures and the prime minister’s desire to drive corporate investment in the tech space.
“Japan’s Nikkei 225 has risen 68% since April 2025 amid a weaker yen, which makes the country’s exports more competitive from a price perspective, and a shift in the political backdrop. That’s an unusually large movement for an equity index in such a short period.
Eurozone upturn begins as investor confidence rises
Encouraging news from the eurozone, where investor confidence has risen.
The Sentix index measuring investor morale in the euro zone, released this morning, rose for the third month running to its highest level since July 2025.
The index rose to 4.2 points in February from -1.8 the month before, beating forecasts by analysts polled by Reuters for a reading of 0.0.
Sentix says:
“The recession in the euro zone appears to have come to an end and an upturn seems to have begun.”
Mark Sweney
A top Warner Bros Discovery executive has said he is “confident” that Netflix will keep its HBO Max streaming service, home to hit content such as Game of Thrones and Succession, despite uncertainty about the future ownership of the US film and TV giant.
JB Perrette, who runs WBD’s global streaming and games operations, is forging ahead with the long-awaited launch of HBO Max in the UK & Ireland on 26th March as Netflix and Paramount Skydance continue to battle for control of WBD.
“The one thing that is very clear in public statements from Ted [Sarandos] and Greg [Peters, co-chief executives of Netflix] – and this is 15 to 20 years in the making – they have talked about HBO many years ago as ‘could they get to be HBO before HBO became them’,” he said, speaking at the launch event for HBO Max UK&I.
“They have an enormous amount of respect and appreciation for the HBO brand in exactly the way we are defining it. It is distinct, premium, must-watch, different from mass volume [models].”
WBD’s board of directors has unanimously backed Netflix’s $82.7bn (£61.5bn) all-cash deal, while rival Paramount is attempting to derail the agreement with a $108.4bn takeover offer that it is trying to win support for directly from shareholders.
In the US, critics of the Netflix deal argue that buying HBO Max, which has around 60 million US subscribers, would give it too much power.
However, in a number of key markets, notably the major European countries where WBD had to unwind longstanding HBO deals with Sky, the HBO Max streaming service has only just launched.
The UK – where the service will include TNT Sports content such as Premier League and Champions League football migrated from WBD’s Discovery+ app – is the last major world market to see the launch of HBO Max.
“These rollouts where someone could say ‘why are you rolling out, you are selling the company?’,” said Perette.
“The reality is Netflix want the brand to be vibrant, dynamic, to be stronger and to be visible. I can’t say exactly what they want to do with it. But I am confident… having it in this market and actually having a more broad following, not just an industry following which is where it has been residing in Sky, is very helpful to their strategic ambitions as opposed to something that is contradictory to that.”
Perette said that by the end of March, when the service has launched in the UK & Ireland, HBO Max will have been live in three of the big five European markets for less than 90 days.
In the UK the cheapest tier, Basic with Ads, will cost £4.99. However, WBD expects the most popular tier to be its £5.99 monthly subscription, Standard with Ads, which includes recent movies from Warner Bros.