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Expect jitters for gilts ahead of election day

Paul Rayner, Head of Government Bonds

1 June 2017

Although the buildup to the election has preyed on investors’ minds this week, after a prolonged rally in UK government bonds throughout Tuesday and Wednesday, late yesterday afternoon, markets digested a flurry of news that sent yields spiking higher across the board. The Debt Management Office’s announcement of two new syndications of longer dated government bonds came alongside  a wave of selling into the end of the month.

The cherry on the cake for this rise in yields was a new opinion poll on Wednesday afternoon suggesting a much more comfortable lead for the Conservatives ahead of next week’s General Election, with sterling also recovering as a result. However, with plenty more political fireworks likely before then, we expect more jitters in UK bond markets ahead of election day.

The value of investments and the income from them is not guaranteed and may go down as well as up and investors may not get back the amount originally invested. The views expressed are the author’s own and do not constitute investment advice.