Inflation remains the biggest threat to gilts, but with oil coming down, Burnham might be given more leeway from markets further out in the future. This is because the political risk in GBP rates is more about the UK’s inflation outlook than sovereign risk. If Labour manages to pull off a fiscal expansion in the near term, then the prospect of reaching the inflation target of 2% could be delayed again. But with oil falling in recent weeks, the inflation outlook should soften next year. [...]