U.K. Bond Market Goes Into Vote Cautiously Relative to FX
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The bond market has lagged the recent optimism for a Conservative majority seen in the sharp move higher in the pound. Still, if Prime Minister Boris Johnson does indeed win on Thursday then a sell-off across the curve should only be mild.
The cautious approach of gilts into the election leaves the 10-year yield trading at the top of recent ranges. Volatility isn’t pricing a particularly pronounced move following the election, with the curve potentially shifting initially higher by around 10 basis points.