This episode of the FT News Briefing, hosted by Victoria Craig, covers three major breaking stories from Monday, June 22nd. The episode features two expert guests: Lucy Fisher, the FT's Whitehall editor and host of the Political Fix podcast, and Claire Jones, the FT's US economics editor.

The briefing opens with a developing political crisis in the UK, where Prime Minister Keir Starmer is reportedly on the verge of resignation following a devastating by-election result. It then turns to high-stakes diplomacy between the US and Iran, where a fragile ceasefire deal faces serious challenges. Finally, the episode examines the market implications of new Federal Reserve Chair Kevin Warsh's dramatic shift away from forward guidance — a communication overhaul that is already rattling bond markets and raising questions about who wins and who loses in a more opaque Fed era.

Starmer on the Brink After Burnham's Makerfield Landslide

Keir Starmer's allies told the FT he is 'on the brink of resigning,' with colleagues expecting an 'orderly transition plan' announcement potentially as early as Monday, June 22nd.

The trigger was Greater Manchester Mayor Andy Burnham's 'seismic victory' in the Makerfield by-election, coming weeks after Labour suffered heavy losses in Scottish, Welsh, and English council elections where Nigel Farage's Reform UK 'swept the board.'

Burnham's pitch to the party: 'I've shown locally that I can take on Farage and beat Reform. Now let me lead the party and I can do it nationally.' - Lucy Fisher

Starmer reportedly feels 'very aggrieved' that he hasn't received enough credit for winning a 'stunning majority less than 2 years ago,' and is described as being 'in a state of shock at just how quickly things have unraveled in less than 24 months.' - Lucy Fisher

A formal leadership contest is not guaranteed. Team Burnham is debating whether to wait until the autumn party conference in September to allow more time to firm up their policy platform before the critical first 100 days in government.

Wes Streeting, the former Health Secretary who resigned last month and sits to the right of the party, also has supporters who want a full contest with policy scrutiny rather than a coronation.

US-Iran Ceasefire Talks Stall as Israel Strikes Lebanon

The US and Iran held talks in Switzerland on Sunday aimed at a permanent end to the war, building on an interim deal reached the previous week that paused fighting and reopened the Strait of Hormuz for 60 days.

During the talks, President Trump threatened on social media to 'hit Iran very hard again.' Tehran dismissed the post, saying 'Iran does not take the US's threats seriously.'

The interim deal was already under strain before the Switzerland talks because Israel repeatedly struck Lebanon in the days following the US-Iran pause — a major sticking point given Iran's consistent demand that Beirut be included in any ceasefire.

Investors are pouring billions into the defense sector driven by both the US-Iran conflict and Russia's war in Ukraine. Defense tech startups raised more than $12 billion from venture capital this year — almost double the same point last year.

Key demand drivers include next-generation weapons: drones, autonomous vessels, and battlefield AI.

Warsh Kills Forward Guidance, Sparking Bond Market Volatility

In his first Fed meeting as chair, Kevin Warsh declined to submit a dot to the dot plot and issued a truncated policy statement with no steer on whether the next interest rate move would be up or down.

Markets responded by pricing in more rate hikes: 2-year Treasury yields — highly sensitive to monetary policy — moved up 'quite dramatically to their highest level in more than a year.' - Claire Jones

Warsh's stated rationale is that excessive forward guidance has caused Wall Street to second-guess the Fed rather than form independent judgments based on economic data. 'This is what Warsh wants in a way — for markets to speculate.' - Claire Jones

The shift represents a return to pre-financial-crisis central banking, 'something more akin to the era of Alan Greenspan, whom Warsh said he's a fan of.' - Claire Jones

The risk: a generation of financial market participants has grown up with explicit Fed signals. Removing them 'is likely to get more volatility from people who just don't really know how to read the Fed without these very explicit clues.' - Claire Jones

The likely winners are sophisticated hedge funds who understand the Fed's 'reaction function' — the framework linking economic data to policy decisions — and can trade the resulting volatility profitably without needing constant official guidance.