UK gilt yields slide as polls show PM Johnson's lead fading
LONDON, Nov 26 (Reuters) - British government bond yields fell sharply on Tuesday as opinion polls suggested Prime Minister Boris Johnson's lead over the opposition Labour Party ahead of the Dec. 12 election may be narrowing. Taking its lead from sterling, the 10-year gilt yield fell to its lowest level since Nov. 1 at 0.635% before rising to 0.642% as of 1426 GMT, down more than 5 basis points on the day. Other maturities saw similar falls. The last two opinion polls from ICM/Reuters and Kantar showed a tighter lead for Johnson compared with previous surveys, raising doubt around the market's consensus that his Conservative Party looks odds-on to win a clear majority. For gilt investors, the prospect of another hung parliament makes an extension of Brexit uncertainty more likely, raising the chance that the Bank of England will cut interest rates in future and lower British borrowing costs. "The shift in the polls is far from dramatic and given their inherently volatile nature it would be presumptuous to believe that this is the beginning of a major shift, but it could at least start to raise a little doubt on the notion that a Conservative majority is a strong probability," said David Cheetham, chief market analyst at online broker XTB. The gap between yields for the benchmark 10-year gilt and those of the equivalent German Bund narrowed to its lowest since Nov. 7 at 100.4 bps, almost 4 basis points tighter on the day. Dec long gilt future 132.69 (+0.57) Dec 2019 short sterling 99.21 (+0) June 2020 short sterling 99.36 (+0.01) 10-year gilt yield 0.64% (-5.4 bps) -------------------KEY MARKET DATA--------------------------- Long Gilt futures Gilt benchmark chain Short Stg futures Cash market quotes Deposit rates Sterling cross rates UK debt speedguide -------------------KEY MARKET REPORTS-------------------------- Gilts Sterling Euro Debt Dollar U.S. Treasuries Debt reports --------------------GILT STRIPS DATA ------------------------- Gilt strips data All gilt strips Gilt strips IO Gilt strips PO (Reporting by Andy Bruce; Editing by Angus MacSwan)
