EUROPEAN INFLATION: Spain May HICP Revised Up 0.02pp to 3.65%Y/Y (1/2)

Full Streeting piece is here: https://www.thetimes.com/uk/politics/article/keir-starmer-latest-news-kings-speech-resign-cx5vk5t6g

• "Wes Streeting has told allies that he is preparing to resign and trigger a leadership contest as soon as tomorrow"
• "Allies of Streeting who have spoken to him directly said that he has made clear that he is “going to go for it”. They said that he is likely to resign on Thursday and mount a formal challenge for the leadership"

Headlines crossing via Bloomberg

• "*WES STREETEING PREPARING TO RESIGN: TIMES"
• "*STREETING TOLD ALLIES HE'S PREPARING TO TRIGGER CONTEST: TIMES"
• "*STREETING TOLD ALLIES PLANS TO RESIGN SOON AS TOMORROW: TIMES"

GBP 3m10y implied vol. moved higher on Tuesday, alongside an increase in UK political risk premia.

• Still, it stuck within the range observed during April, even as long-dated gilt yields registered fresh cycle/multi-decade highs.
• A similar picture is seen in the 3m30y metric.
• Markets seem to be of the view that the recent uptick in UK rates could prove sticky with reduced vol., largely on the back of 2 factors:

1. Most being of the view that it will be a case of when, not if, PM Starmer leaves his current role, increasing fiscal risk premia owing to a potential shift to the left within the Labour Party.
2. Still elevated oil prices, even with the (shaky) U.S.-Iran ceasefire holding, owing to ongoing supply logjams around the Strait of Hormuz. Expectations for a meaningful ’26 global oil supply shortfall are building. Higher energy prices have been a key factor in the hawkish repricing in the GBP front end.