British bond market "warm nearby cold far away": Mr. Barnum's "stable gentleman" image is starting to take effect, but long-term British bonds are still being shunned.

British bond investors are gradually gaining confidence in Andy Burnham's fiscal discipline in borrowing and expenditure, but this is still not enough to make them position themselves in UK long-term bonds. Investors from Jupiter Asset Management, Neuberger Berman, and Royal London indicate that they will continue to avoid long-term bonds until the new Chancellor of the Exchequer is appointed and the first budget is unveiled. However, they are optimistic about short-term bonds and believe that current yields are at attractive levels. Piers Hillier, Chief Investment Officer at Jupiter Asset Management, said, "Long-term bonds are completely out of favor." He added that one issue facing the market is that pension funds are no longer absorbing long-term bonds in large quantities as they used to. As the most likely successor to UK Prime Minister Keir Starmer, Burnham has been gradually testing his economic vision in public. He stated on Thursday that he will adhere to the Labour Party's election manifesto while also hinting at potential adjustments to some taxes. This week, the yield spread between UK 2-year and 10-year bonds widened to 66 basis points, reaching the highest closing level since mid-March. Although this trend is consistent with changes in global bond curves, the UK bond curve is steeper than that of the US and Germany, reflecting investors' demand for higher risk premiums. However, many investors have seen preliminary signs that Burnham may be able to calm the jittery UK bond market. David Roberts, Fixed Income Head at Nedgroup Investments, said Burnham is working on shaping the image of a "steady gentleman", and if oil prices continue to decline, the UK economy will benefit. Fred Repton, Senior Portfolio Manager at Neuberger Berman, said, "The lack of policy details at the moment has actually boosted market sentiment to some extent." Burnham's cautious approach and reluctance to reveal his cards have helped create a "calm as water" atmosphere in the UK bond market. The continued decline in oil prices has also injected confidence into the market. Currency markets currently have reduced expectations of a rate hike by the Bank of England this year, with the probability of a 25 basis point hike before the end of the year now being 80%. This is in stark contrast to traders betting on at least one rate hike last month. Ben Nicholl, Senior Fund Manager at Royal London Asset Management, is one of the investors buying short-term bonds, betting that market expectations will soon shift towards a rate cut.