Markets stand firm despite parliament hiatus

There’s no objective evidence so far that the hung parliament hiatus is causing market panic.

The single best indicator: demand to buy UK government debt, was tested in what could have been an unfortunately-timed debt auction at 1030 this morning.

The result was even more bidders to lend Britain money than is normal. The Debt Management Office got £5.6bn offers for its £2.25bn worth of bonds, a ‘cover ratio’ of 2.47 times, much higher than normal.

Stock markets were down a bit, but less than they were in Europe. So far, this is more of a general sell-off after yesterday’s eye-watering market surges. The pound is down against the dollar, but broadly unchanged versus the Euro.

Basically, markets are still very much focussed on the much bigger story around yesterday’s Euro bailout.

I have no doubt that an event such as the collapse of Lib Dem-Conservative talks, would see a notable market reaction. And there is a susceptibility to some sort of speculative attack. But suggestions that markets are “quaking” are, so far, well off the mark.