Bonds: Poll results knock yields back to October lows

These were the movements in some of the most widely-followed 10-year sovereign bond yields:

US: 2.25% (-1bp)

UK: 1.01% (-3bp)
Germany: 0.33% (-3bp)
France: 0.76% (-4bp)
Spain: 1.54% (-4bp)
Italy: 2.10% (-2bp)
Portugal: 3.14% (-5bp)
Greece: 5.97% (-8bp)
Japan: 0.04% (-1bp)

A surprise poll result showing the Tory lead over Labour had shrunk to just five percentage points ahead of the 8 June election pushed Gilts higher.

That poll from YouGov/Times also sent sterling sharply lower as markets moved to price-in a somewhat higher chance of a hung parliament.

"The prospect of an indecisive election outcome, i.e. a hung Parliament, is a concern. With only around a year and a half of negotiation time remaining under Article 50, delays in both forming a government and difficulty passing legislation might increase the risk of UK businesses facing a "cliff-edge" departure from the EU in April 2019," commented Andrew Wishart from Capital Economics.

As 10-year Gilt yields moved back towards their October 2016 lows, those on similarly-dated US Treasuries were also near the bottom of their year-to-date trading range amid a spate of mixed economic releases on Friday.

More significantly however, buying in longer-dated debt came amid US 10-year inflation breakevens back at their November lows as traders priced in a lower of chance of fiscal stimulus in the States in 2017 in part due to the potential for increased political gridlock on Capitol Hill.