We doubt that the downward pressure on UK gilt yields from the weaker global economy will fade over the next year. In the near term, the 10-year gilt yield may therefore fall below its current two-year low of 1.0%. And if there were a no deal Brexit on 12th April, then domestic factors would exacerbate the influence from overseas and gilt yields would fall sharply. But if a deal were agreed before 12th April or if Brexit were delayed for a long time, the prospect of interest rate hikes from the Bank of England would mean that government bond yields in the UK rise even as yields overseas fall.
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