Are Bond Yields Moving on Political Uncertainty?

T’was a busy week for UK politics last week, with Prime Minister Keir Starmer resigning, now-former Manchester Mayor Andy Burnham ascending and big questions over fiscal policy. Fears of a “lurch to the left” dominated headlines, which weighed the possibility of big tax hikes and a Chancellor of the Exchequer that markets won’t like. Amid it all, a constant throughline: “Bond markets haven’t freaked out thus far, but they could if ___________ happens.” Wealth taxes, Chancellor Ed Miliband, nationalizations and capital gains taxes all had their turn filling in that blank. We suggest taking a deep breath, and not just because the “lurch to the left” narrative looks far over its skis. Bond markets have spent all year telling you UK yields don’t hinge on local politics. Read Full Article »