Markets are pretty relaxed ahead of the UK’s general election results. Here’s what’s happened so far in the vote.
The FTSE 100, Britain’s main stock index, has been pretty steady for the past three months — tomorrow’s result could change that if something completely unexpected happens — though pretty much everyone is expecting a hung parliament, so there many not be much room for manoeuvre.
As of 4:15 p.m. London time (12:15 p.m. New York) it’s down 0.60% at 6,893.30. Here’s how the index has looked recently:
Here’s the 10 year gilt yield, the most common barometer of the UK’s credit worthiness.
The yield is actually down today, but it’s up over the last few weeks in general. As of 4:15 p.m London time (12:15 p.m. New York) it’s at 1.934%.
Samuel Tombs at Capital Economics wants to make sure people don’t get the idea that the recent climb is driven by pre-election nerves — it’s primarily an international effect. But that means there might be room for a negative reaction after the results are more clear. Here’s a he note sent out Thursday:
Although gilt yields have risen over the last few weeks, this seems to have reflected easing fears of deflation, not growing concerns about the outcome of the general election. So with little political risk priced in, gilt yields look vulnerable to rise further if the election fails to yield a stable government.
UK and US bond yields track each other pretty closely, showing that there’s not much of an election effect going on:
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