<p>Hope this isn't too simple a question.</p>

<p>I read an article that stated  that the UK government and EU have reached a draft agreement for a Brexit deal, leading to the following market movements after the announcement.</p>

<p>1) GBP rose against USD
2) Yields increased for 10-year British government bonds (i.e bond prices fell)</p>

<p>The first point seems fairly predictable, but why would seemingly less investment risk lead to a decline in bond prices? Could this be more about British  equities becoming more attractive relative to bonds due to less perceived risk?</p>

CC BY-SA 4.0
2018-11-15T19:09:19.117Z
Not sure what you mean by "less investment risk". Apparently the bond market disagrees with you, as seen by the spread between risk premia between US and UK bonds.
Michael
CC BY-SA 4.0
2018-11-15T21:26:37.727Z
Bond yields jump around for any number of reasons. It’s fairly rare that you can tell for sure what the cause was.
Brian Romanchuk
CC BY-SA 4.0
2018-11-16T00:38:19.300Z
@Michael Thank you for your input. What I meant was that less uncertainty (i.e. a Brexit deal) should in theory mean less risk for UK bonds.
Rfh
CC BY-SA 4.0
2018-11-16T00:39:35.677Z
@BrianRomanchuk That makes sense. The markets are certainly complicated. Thanks for the answer!
Rfh
<bonds>
Bond prices and Brexit
Rfh
# Bond prices and Brexit

(Asked by: username_0 on 2018-11-14)

Hope this isn't too simple a question.

I read an article that stated that the UK government and EU have reached a draft agreement for a Brexit deal, leading to the following market movements after the announcement.

1) GBP rose against USD
2) Yields increased for 10-year British government bonds (i.e bond prices fell)

The first point seems fairly predictable, but why would seemingly less investment risk lead to a decline in bond prices? Could this be more about British equities becoming more attractive relative to bonds due to less perceived risk?

**Tags:** bonds
> **Comments:**
> **username_1**: Not sure what you mean by "less investment risk". Apparently the bond market disagrees with you, as seen by the spread between risk premia between US and UK bonds.  
> **username_2**: Bond yields jump around for any number of reasons. It’s fairly rare that you can tell for sure what the cause was.  
> **username_0**: @Michael Thank you for your input. What I meant was that less uncertainty (i.e. a Brexit deal) should in theory mean less risk for UK bonds.  
> **username_0**: @BrianRomanchuk That makes sense. The markets are certainly complicated. Thanks for the answer!  

---

## 0 answers

