Global Fund Giants Swooped Into British Bonds During Labour Party Leadership Crisis

Major global investors and asset management firms capitalised on UK government bonds during a dramatic sell-off sparked by uncertainty surrounding Labour Chancellor Rachel Reeves’s position. Investment behemoths including BlackRock, Schroder’s and Fidelity identified strategic buying opportunities as gilt prices plummeted and yields surged in what became the most significant intra-day movement in UK bonds since April’s worldwide sell-off.

Simon Blundell, co-head of European active fixed income at BlackRock, the world’s premier asset manager, confirmed the fund strengthened its “overweight” position on bonds during Wednesday’s market turbulence. This strategic purchasing helped stabilise gilt yields on Thursday, swiftly reversing the 0.22 percentage point increase in 10-year borrowing costs.

The market response proved positive after Prime Minister Sir Keir Starmer’s emphatic support for Reeves, with UK government bonds rallying and sterling strengthening. Gilt yields effectively eliminated the one-day surge recorded on Wednesday when the Chancellor’s future appeared uncertain following an emotional display in the House of Commons.

Ten-year government debt yields, which serve as an indicator for government borrowing costs, decreased by 0.18 percentage points to 4.53 per cent, returning to pre-crisis levels. The yield had reached a peak of 4.66 per cent, marking its largest intra-day movement since the market disruption caused by American trade policies in April.

Sterling demonstrated resilience, recovering some ground against the dollar with a 0.15 per cent improvement to $1.365, though remaining below its pre-speculation level of $1.37. The market stabilisation followed Sir Keir Starmer’s definitive statement to the BBC, declaring “The chancellor is going nowhere,” effectively ending the brief period of political uncertainty.