Investors say a budget that avoids surprises could even spark a relief rally as UK gilts face a test with just over a week until Chancellor John Healey’s fiscal statement. Long-dated gilts saw their first weekly gain in four last week, though the bond market remains historically elevated in yield.
HSBC Chief Multi-Asset Strategist Max Kettner favors gilts, especially longer-dated bonds, arguing investor concerns are already priced in. M&G Plc and Ninety One Plc are adding to holdings, with Ninety One’s Jason Borbora-Sheen saying gilts have “been through the fire.” Investors are heartened by the government’s apparent awareness of the market’s importance for policymaking.
The calm marks a shift from the narrative surrounding Andy Burnham as he emerged as the next Prime Minister, with his criticism of the UK being “in hock” to the bond market. Since then, Burnham’s fidelity to fiscal rules has helped calm nerves, and investors have shifted attention elsewhere. The bond market may reward Healey if he can keep it that way.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing