Looser fiscal policy unlikely to mean a bloodbath for Gilts

Despite a slight dovish shift, the Bank of England’s decision to leave rates on hold today led to only a small market reaction. Speeches from both Conservative Chancellor Sajid Javid and his Labour counterpart John McDonnell laying out plans to loosen fiscal policy after the upcoming election are arguably more significant for Gilts. This presents an upside risk to Gilt yields, but on balance, we do not expect them to rise by much.