Every week there seems to be another email, WhatsApp message or school app notification. Cake sales, sports days, school trips, assemblies, fundraising events and parents’ evenings. Teachers somehow keep dozens of children engaged while juggling an endless stream of administration.

Then you stop and think about the headteacher.

Suddenly the challenge looks very different. It’s no longer about one classroom. It’s about hundreds of pupils, dozens of staff, safeguarding, inspections, buildings and, crucially, balancing the budget. The responsibility increases exponentially.

Politics isn’t so different.

Andy Burnham may have earned a strong reputation as Mayor of Greater Manchester, but becoming Prime Minister brings a completely different set of responsibilities. One of the first tests isn’t winning public opinion – it’s winning the confidence of financial markets.

That became evident after he entered Number 10 last week. Since then, yields* on UK government bonds (also known as gilts) have remained above 5%, reflecting investor concerns about the UK’s fiscal outlook (the health of the public finances) and the cost of funding future spending commitments. The appointment of John Healey as Chancellor was widely viewed as an early signal that maintaining fiscal discipline would remain a priority.

Our chart this week shows the context in which the new Chancellor will be working. It tracks the changes in the yield on 10-year** gilts since the Labour government was elected in July 2024. When the party first took office, yields remained steady because the victory had been largely anticipated by investors. Markets were reassured by then Chancellor Rachel Reeves’ heavy emphasis on fiscal discipline.

However, yields spiked after her Budget in October 2024, when the government announced higher public spending, increased borrowing and changes to the fiscal framework to allow greater public investment.

Bond yields rose sharply again after the US and Israel began military strikes against Iran at the end of February this year, which resulted in disruption to oil and gas markets, pushing up inflation expectations and leading investors to reassess their expectations for further interest rate cuts.

Yields rose again earlier this year after Labour suffered serious losses in May’s UK local elections, fuelling political uncertainty.

Why does this matter to investors?

Government bond yields influence borrowing costs across the economy, from mortgages and business loans to the government’s own debt repayments. Higher yields leave less room for additional spending and make markets increasingly sensitive to fiscal policy decisions.

For investors, it’s another reminder that while political headlines dominate the news cycle, it’s often the bond market that ultimately shapes what governments can and cannot do.

The sheer volume of political headlines, economic data and market commentary can feel overwhelming. The challenge isn’t finding information – it’s knowing what matters and what doesn’t.

That’s where professional portfolio management can add value. As an investment team, we spend every day separating the ‘signal’ from the ‘noise’. That means interpreting events through the lens of long-term investing rather than reacting to every headline. This allows advisers and clients to focus on what matters most to them, confident that portfolios are being managed with a clear investment process, discipline and a long-term perspective.

Key takeaway

Successful investing isn’t about reacting to every headline. It’s about understanding which events genuinely change the investment outlook – and which are simply noise.

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This article is provided for general information purposes only and should not be construed as personal financial advice to invest in any fund or product. These are the investment manager’s views at the time of writing and should not be construed as investment advice. The opinions expressed are correct at time of writing and may be subject to change. Capital is at risk. The value and income from investments can go down as well as up and are not guaranteed. An investor may get back significantly less than they invest. Past performance is not a reliable indicator of current or future performance and should not be the sole factor considered when selecting funds.