How worried is the Gilt market about the “King in the North”?

Gilt yields have risen substantially today, but that doesn’t, primarily, appear to reflect Andy Burnham’s big win in the Makerfield by-election and presumed challenge for the Labour leadership. Indeed, judging by most market-based indicators, investors’ do not appear all that concerned about Burnham’s likely ascent to Prime Minister in the coming months. That may yet change again if he tacks towards a more expansive fiscal policy. But, based on the incoming economic data, the BoE’s recent signalling, and the fall in energy prices as the Strait of Hormuz re-opens, we expect Gilt yields across the curve to fall further this year.