Tears, Tantrums & Treasury Turmoil: Reeves in the Weep Seat?

As Prime Minister Keir Starmer fielded questions from an emboldened Conservative Opposition, all eyes were drawn to Rachel Reeves, seated just behind him. The Chancellor appeared visibly emotional—a fleeting moment, but one that quickly snowballed into headlines, speculation, and market jitters.

Was it frustration over policy wrangling? Exhaustion from another late-night rewrite of the welfare bill? Or simply the dawning realisation that leading the Treasury is less “mission-driven” and more “crisis-stacked”? Whatever the cause, her reaction lit up Westminster—and spooked the City.

The backdrop:
Labour’s welfare bill upheaval

The timing couldn’t have been worse. Hours later, Labour’s flagship welfare reform bill scraped through Parliament—though not before being heavily diluted. Originally pitched as a £5bn cost-saving package by 2030, the bill emerged from internal negotiations looking far leaner, thanks to a rebellion from Labour’s own left flank. What began as a major fiscal reform ended up closer to a policy placeholder.

Conservative MP Kemi Badenoch didn’t miss the opportunity to twist the knife, dismissing the entire effort as “a waste of time.” Ouch. But not unexpected from an Opposition that’s still licking its wounds from 2022’s own economic implosion.

The Prime Minister declined to address Reeves’ moment during PMQs, which only added fuel to the speculation fire. He later told BBC Radio 4 that her reaction was linked to a personal matter and had “nothing to do with politics.” Fair enough—but markets don’t wait for context.

Immediate market fallout

And so, the fallout: UK 10-year gilt yields spiked to 4.61%, the sharpest jump since the chaotic Truss-Kwarteng mini-budget. Sterling followed suit, falling below 1.3600 against the dollar, and hitting its weakest level against the euro since April.

Broader economic and geopolitical headwinds

Meanwhile, across the pond, the US added to the gloom with a dismal ADP employment report showing a -33K change in private payrolls—missing forecasts by such a margin, it may qualify as performance art. All eyes now turn to the Non-Farm Payrolls data due later today. A surprise there could amplify the already jittery mood across global bond and currency markets.

And let’s not forget the looming US tariff deadline. Former President Trump—yes, still negotiating trade deals from what appears to be a rotating golf cart—announced a shiny new agreement with Vietnam. With a UK deal and a partial China deal already under his belt, it seems like he’s collecting trade partners the way others collect fridge magnets.

Elsewhere, Eurozone and US Services PMI data are expected to round out the economic chaos later today. Because why settle for one source of volatility when you can have three?