Market News

(Bloomberg) -- UK bonds attracted the weakest demand in almost a year at an auction Tuesday, a sign of lingering investor anxiety over last week’s fiscally expansive budget and the US presidential election. 

Investors placed bids totaling 2.81 times the £3.75 billion ($4.9 billion) of 10-year notes on offer, the lowest ratio since December. The yield on UK 10-year debt was three basis points higher at 4.49%, after earlier dropping to 4.46%.

UK Chancellor Rachel Reeves last week announced plans to run up borrowing and boost investment, triggering a selloff in gilts as investors worried about inflation pressures. Moody’s Ratings said the budget was the most aggressive fiscal loosening since the pandemic and posed new challenges to public finances.

The sale comes hours before voting closes in the US presidential election, a key risk event for global markets. Many investors are sitting on the sidelines ahead of the results, which remain too close to call.

“Market focus is now squarely the US election, given the close race and potential market ramifications,” said Neil Mehta, portfolio manager at RBC BlueBay Asset Management.

(Updates with context, comment througout.)