Gilts and the election
Discussion
There's a bit of chatter around at the moment about the gilts market going down the pan in the event of a hung Parliament, a Labour victory and/or anything not involving an outright Tory win.
Guido Fawkes is running this line, unsurprisingly, and the FT reports that:
"Government bond markets will for the first time open at 1am on the morning after the general election to allow traders to buy and sell gilts as results flow in"
Anyone in the know? Is there likely to be mass panic? Is the previously safe haven of a gilts fund likely to become worth 40p overnight?
Guido Fawkes is running this line, unsurprisingly, and the FT reports that:
"Government bond markets will for the first time open at 1am on the morning after the general election to allow traders to buy and sell gilts as results flow in"
Anyone in the know? Is there likely to be mass panic? Is the previously safe haven of a gilts fund likely to become worth 40p overnight?
Well that is typical journo crap about the markets. The reality is the govt bond markets are open 24 hours a day now.....it's just they aren't very liquid when London is shut. All it means is that the traders will be in overnight hoping to make some money out of Asian or US clients....I doubt any of the big UK clients will be trading. If I remember correctly the Gilts market was open overnight after the last election and probably the one before that.....
I have a theory about jounralists...when you read an article about something that you know about it is generally rubbish. So does that mean that everything you read is rubbish ?!?! Certainly most of the stuff you read about the financial markets is way off the mark.
And no Gilts won't be worth 40p the next day. The market might move a few % but not any more. We'll have to see some major policy changes/announcements for fireworks to kick off. The market might s
t itself if the LibDems form part of the govt with what that means for bankers pay and taxes on their mansions!
I have a theory about jounralists...when you read an article about something that you know about it is generally rubbish. So does that mean that everything you read is rubbish ?!?! Certainly most of the stuff you read about the financial markets is way off the mark.
And no Gilts won't be worth 40p the next day. The market might move a few % but not any more. We'll have to see some major policy changes/announcements for fireworks to kick off. The market might s
t itself if the LibDems form part of the govt with what that means for bankers pay and taxes on their mansions! Ed Fender said:
Beardy10 said:
The market might st itself if the LibDems form part of the govt
That's the thing I'm concerned about.t itself if the LibDems form part of the govttting themselves than the market itself. Looking at the odds on betfair it's too close to call between a Tory majority and a hung parliament. The market will like a Tory govt obviously and probably has the latter priced in. Beardy10 said:
Well that is typical journo crap about the markets. The reality is the govt bond markets are open 24 hours a day now.....it's just they aren't very liquid when London is shut. All it means is that the traders will be in overnight hoping to make some money out of Asian or US clients....I doubt any of the big UK clients will be trading. If I remember correctly the Gilts market was open overnight after the last election and probably the one before that.....
I have a theory about jounralists...when you read an article about something that you know about it is generally rubbish. So does that mean that everything you read is rubbish ?!?! Certainly most of the stuff you read about the financial markets is way off the mark.
And no Gilts won't be worth 40p the next day. The market might move a few % but not any more. We'll have to see some major policy changes/announcements for fireworks to kick off. The market might st itself if the LibDems form part of the govt with what that means for bankers pay and taxes on their mansions!
Gilts have not been open for any previous election. There is genuine concern about the public debt and the effect it will have on gilts. This is a big deal and there will be a lot of traders in at 1am, I can assure you. As for saying "The market might move a few % but not any more" is absolutely crazy. If bond markets move " a few %" then that is the world going to hell in a handbasket.I have a theory about jounralists...when you read an article about something that you know about it is generally rubbish. So does that mean that everything you read is rubbish ?!?! Certainly most of the stuff you read about the financial markets is way off the mark.
And no Gilts won't be worth 40p the next day. The market might move a few % but not any more. We'll have to see some major policy changes/announcements for fireworks to kick off. The market might s
t itself if the LibDems form part of the govt with what that means for bankers pay and taxes on their mansions! R11ysf said:
Gilts have not been open for any previous election.
Sorry that's rubbish, they have. I know and have worked with people that trade that market, they worked through the night last time. This whole idea of the market needing to be "open" is just rubbish. It's an OTC market you can trade it whenever you want all you need is two people that want to do a trade, you don't the BoE to declare it "open". You can pretty much trade it overnight every business day of the year. Believe me if a client in Tokyo wants a price at 4am any day of the year they get a price. And I suggest you look at some of the historical price volatility..... a few % is NOT the market going to hell and a handbasket. Have a look at some data for price volatility over the last 20 years in the Gilt market. It's pretty much the most disfunctional and illiquid of all the major government bond markets so it's plenty used to volatility.
I was referring to the LIFFE futures and it is the first time they will be open. If you are talking OTC then every market of everything ever is always open - but that is ridiculous. Banks may well do OTC trades when the markets are closed but you try and get a market maker to give you a quote for size when the cash or futures is closed and you will get told where to go. Market "open" is always referenced to either the futures or cash markets.
If the gilt has an implied few percent move in the interest rate that will be huge. As for looking at 20 years worth of volatility then no we are not going to have a Black Wednesday environment but for current trading environments it would be huge.
If a hung parliament happens the gilts will get smacked. If you don't think so then go long easy as that. Personally I'll stick with the 'dumb journalists' and sell the crap out of them with all the other stupid traders at 1am on Friday if the hung parliament comes through.
If the gilt has an implied few percent move in the interest rate that will be huge. As for looking at 20 years worth of volatility then no we are not going to have a Black Wednesday environment but for current trading environments it would be huge.
If a hung parliament happens the gilts will get smacked. If you don't think so then go long easy as that. Personally I'll stick with the 'dumb journalists' and sell the crap out of them with all the other stupid traders at 1am on Friday if the hung parliament comes through.
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