UK government bonds suffered sharp losses, pushing long-term gilt yields to their highest level in nearly three decades. The selloff intensified as investors weighed the political uncertainty surrounding Prime Minister Keir Starmer's leadership following Labour's poor showing in local elections last week.

A growing faction within the Labour party is now urging Starmer to step down, with multiple politicians publicly calling for his resignation. The local election defeats have sparked internal party turmoil, raising questions about the government's stability and its ability to implement fiscal policy.

The bond market reaction signals investor anxiety about political instability at a delicate moment for Britain's economy. Rising yields mean higher borrowing costs for the government, potentially complicating fiscal planning ahead of the next budget. Markets are closely watching whether the political crisis will affect policy continuity.