UK government bonds rose across the board after Wes Streeting, previously considered a potential candidate for the next UK prime minister, declared his support for Andy Burnham. This endorsement removed a key source of uncertainty following the resignation of Keir Starmer.

The yield on the UK 10-year government bond closed approximately 4 basis points lower at 4.81%. The news of Starmer's resignation did not cause significant market turbulence, as it had been widely anticipated.

German government bonds continued their upward trajectory, with the yield curve steepening. This move came after European Central Bank President Christine Lagarde stated she saw no need for a more forceful policy response to the conflict involving Iran, prompting traders to scale back their bets on interest rate hikes.

The yield on the German 2-year government bond fell by 5 basis points to 2.61%. The amount of ECB rate hikes priced into swap markets by year-end decreased to 33 basis points, down from 37 basis points the previous week.

Market Snapshot:

The yield on the German 10-year government bond declined by 3 basis points to 2.95%.

The German government bond futures contract rose by 38.00 points to 126.47%.

The yield on the Italian 10-year government bond fell by 4 basis points to 3.65%.

The yield spread between Italian and German 10-year bonds narrowed by 1 basis point to 70 basis points.

The yield on the French 10-year government bond decreased by 4 basis points to 3.71%.

The yield on the UK 10-year government bond dropped by 4 basis points to 4.81%.