UK Markets Aren’t Afraid of a Labour Victory: Gilbert & Ashworth

In the April 1992 UK election, a consistent Labour lead in polls was unexpectedly overturned in the vote, with the Conservatives winning a fourth consecutive victory. In the following hours, at 2:30 a.m. and again at 8:15 a.m., the Bank of England took advantage of a surging gilt market to sell £1.6 billion ($2 billion) of new bonds; throughout the night “much more than this amount was soldfrom the bank’s own holdings.”

The central bank wasn’t making a political statement. In the month prior to the plebiscite, two-year gilt yields had soared by a full percentage point to 10.6% ...