Benchmark gilt down
The 10-year benchmark gilt is falling sharply at the opening. It is now down 0.8, after a weak close last night.
This will make for a tricky auction of £2.25bn of gilts - think of it as the government borrowing £2.25bn - later today.
I'll elaborate on the causes and consequences in a few moments.
But investors are saying they are not enamoured of the uncertainty over whether a strong, determined, deficit-cutting government will be formed.
Update 09:00: To be clear, this is not a rout in gilts. And the weakness of shares - the hangover after yesterday's party fuelled by eurozone stimulants - will help to underpin the bond prices of all the major economies (as a rule that is quite often broken, when stock markets fall, investors look for the relative safety of government bonds).
All of which tells you that making sense of what's been happening in the gilts market has not been simple over the past few day.
So, for example, the weakness in gilts in the earlier part of yesterday might have been due to the returning risk-appetite of investors, prepared again to put their money into equities rather than AAA sovereign debt (and lest we forget, the ratings agencies have again affirmed that they have no immediate plans to slash the UK's AAA rating).
Or the gilts drop may have been the gravitational pull of falling German bond prices.
It was rational that the price of German and French bonds should fall yesterday, after the announcement of the substantial loans-and-liquidity eurozone rescue package.
Germany and France became more explicitly liable for the debts of over-borrowed countries such as Portugal and Spain. So of course the quality of their own debt deteriorated: you are what you eat; or, to be more precise, your credit is only as good as the credit of those who owe you money.
So the fall in German bond prices is an articulation of why so many German citizens are uncomfortable with the creeping integration of the finances of eurozone countries.
But then gilts weakened further, after Gordon Brown removed himself as a possible obstacle to the formation of a Lib-Lab pact.
At that point, investors became less focussed on the financial drama across the channel and started to become anxious that there was no end in sight to negotiations on the formation of a government for this island.
As Terry Smith, chief executive of Tullett Prebon said on the Today programme, all that investors really care about is that someone ends up in charge with the determination and the means to cut public spending and raise taxes, to make a reality of the official forecasts that the UK's record peacetime deficit will be on a pronounced downward trend in the coming years.
His view is that a Tory-led administration would be seen by those who lend to the government as more credible as a cruncher of the deficit.
Which may be right. But all it tells you is that the sine qua non of a successful Lib-Lab coalition is that it would probably have to say considerably more about what it would do to reduce the deficit - and fast - than either Nick Clegg or Gordon Brown said during the general election campaign.
Those at the top of Labour and the Lib Dems are not market ignoramuses. They know that if a Lib-Lab administration looked as though it would be unwilling or unable to make the difficult decisions necessary for restoring the health of the public finances, the fanfare for its inauguration would be a tumbling pound and a soaring cost of what the government has to pay to borrow. Ouch.
That would be a fast route to economic and political mayhem. So presumably messrs Clegg, Cable, Brown and Darling have a cunning plan to avoid all that.
Update 10.48: No sterling crisis yet. Today's auction of gilts seemed to go pretty well.
The government was trying to borrow £2.25bn for repayment in 17 years. Investors offered to lend some £5.6bn.
So in the jargon, the auction was almost 2.5 times covered - viz, investors were willing to buy more gilts than the Debt Management Office needed to sell, by quite a wide margin.
In other words, creditors may be a bit jumpy about how long it is taking to form a new government, but they don't appear to anywhere near going on a lending strike.
Update 11.00: Although it's plainly good news that the gilt auction went pretty well, gilts have weakened today relative to their main comparator or benchmark, German government bonds.
According to Michael Saunders of Citigroup, gilts have fallen today around 0.4 whereas like for like German bonds are up 0.7.
In other words, investors perceive the risk of lending to the British government to have increased reasonably significantly compared to the risk of lending to the German government.