U.K. Gilt Yields Drop As Conservatives Look Set For Election Victory

Borrowing costs on U.K. government debt declined across all maturities on Friday after the Conservative Party looked set to win the general election. The yield on 10-year gilts fell 7 basis points to 1.87%, according to electronic trading platform Tradeweb. Yields were trading above 2% in the run-up to the election held on Thursday. Opinion polls had showed a tight race with a coalition government likely, but by midmorning Friday, Prime Minister David Cameron's Conservatives were on course for a majority. The relief rally in U.K. government debt -- when prices rise yield fall -- was likely to be short-lived, however, according to Morgan Stanley analysts. "Gilt yields should rise and the curve steepen, particularly as supply picks up in the next six months," they said in a note out Friday morning.