HSBC: If political instability subsides, the mid-term prospects for UK government bonds are promising.

HSBC's Daniela Russell stated in a report that the UK government bond yields are likely to fall in the medium term, as the fiscal austerity measures in the November 26 budget are expected to prompt further interest rate cuts by the Bank of England. However, political uncertainty following reports that UK Prime Minister Keir Starmer may face a leadership challenge could pose a risk to UK government bonds. Russell said, "If we can control any political turmoil, we continue to be positive about the medium-term prospects for UK government bonds, with yields potentially falling further in 2026." Data from Tradeweb shows that the latest 10-year UK government bond yield rose by 2 basis points to 4.405%. HSBC predicts that by the end of 2026, this yield will decrease to 3.75%.