BNP Paribas: The yield spread between UK short-term and long-term government bonds may narrow in the coming months

Prior to the local elections scheduled for May 7 in the UK, the political risk premium has led to an increase in long-term UK government bond yields. De Courcel stated that if political tensions ease after the elections, “we may begin to see a decline in the political risk premium,” which would result in lower long-term yields. She added that, additionally, the supply of UK government bonds is expected to decrease after the second quarter, thereby alleviating the pressure on long-term UK government bond yields.