What to EXPECT UK
Markets and voters think with logic but always act on emotion. While safety and security are what the capital markets need, the electorate want hope, aspiration and excitement.
But with do much damage having already been done, it is tough to expect the sentiment to sustainably improve
However in the initial days, it can be broadly put Sunak or Mordaunt would make a positive mpact whereas Boris would make the negative impact on the pound .
Rishi Sunak was correct in his economic assessment in the build-up to the Tory leadership vote in the summer – right all along.The markets needs an assured hand. We were saying this beforehand [before Truss was elected] in the summer: if Truss came in there was a definite fear factor.Sunak “is probably the most market-friendly candidate because his priority through the [election] campaign was to tackle inflation and do whatever it takes to take it down".
If Rishi Sunak becomes prime minister, it will be first time in history that the occupants of No 10 Downing Street will be richer than the monarch in Buckingham Palace – and at a time when millions of Britons are struggling with a cost of living crisis. Can Torys afford ?
Whether Sunak would see sterling or UK assets climb is another thing but he would definitely bring down the risk premium for sure
The issue with Penny Mordaunt is though she’s popular with a lot of Tories, she’s untested. What’s her economic policy like? That’s all uncharted territory.
And Boris Johnson? “We all know what’s gonebefore. Worries include keeping the party united plus personal integrity worry.
He adds a risk premium to the pound and to bonds. That was evident with the pound yesterday.
Boris re-run would be about “putting the right technocrats in position. If Rishi comes back as chancellor you basically get what a Rishi Sunak premiership would look like.
Jeremy Hunt has already demonstrated his judgment by reversing fast out of Trusseconomics.
Looking at long-term gilts they’re at 100 bp lower than they were after the [mini-budget] blow-up. Not a great deal higher than they were a month ago. So the new leader is less likely to make any sustained impact .
Whoever comes, they are facing an electorate which is likely to vote lavour 57 % and Torys 22 % - that would be at the back of the mind .