UK Rates To Move Before The US?

3 mth (Short Sterling) Interest Rate Future

I’ve previously noted, as has just about everyone else, how sanguine markets have appeared in the face of potential nae, probable post election chaos.

That may be changing.

Short stering, (which we invert, ie subtract from 100, to translate into anticipated 3 month LIBOR) above, is falling on volume.

This could be a result of concerns about a minority government, which might precipitate a rate rise to steady the pound, or anticipating the return of a Conservative government indicating continued good eco news flow which would also require a rate rise.

Barclays are suggesting the drop is because of swaps being unwound.

I think it is probably a combination of factors which is triggering the volume spike. The takeaway here is that volatility in UK related assets is increasing and will stay on that track in the coming weeks.