The FTSE should advance, but not in huge leaps and bounds. I am a buyer of UK equities today, as I have been for many years.
Bond markets
In my view, a Labour government would have led to sharply rising borrowing costs due to its huge spending and nationalisation plans.
But what of the new Tory government?
Its spending plans are also large and unfunded. In other words, spending plans will outstrip tax receipts.
Will there be enough demand for the expected supply of new gilts?
As a sovereign stable nation, yes, there should be enough willing buyers.
However, with rising deficits and as a country importing more than we export, I can see borrowing costs going up – not back to the levels of yesteryear, but a 10-year yield of 0.82 per cent does not seem right when the Bank of England is not buying.
Brexit
Stage one of Brexit will be done by the end of January. Stage two will be as tortuous.
Negotiating a trade deal with the EU will not be straightforward and we could well face another cliff edge no-deal Brexit in 12 months time.
However, my gut instinct is that Boris Johnson will not have to kowtow to the hardline Eurosceptic faction and if a trade deal is not completed in time a fudge will be the order of the day.
Ben Yearsley is co-founder and a director of Fairview Investing
