In the context of "Triple Threat Thursday", Britain's General Election might seem somewhat parochial. With former FBI director James Comey testifying in front of the Senate Intelligence Committee at 10am Eastern Time and the European Central Bank having met at 12.45pm UK time to discuss monetary policy, there are bigger things afoot than an election in an island country on Europe's periphery.
Even so, some people on London's trading floors are getting ready for a long, big night.
It's the macro strategists who are mostly likely to be at their desks non-stop as the British General Election results unfurl. Theirs is the task of interpreting how the election will impact markets. As results come in, they analyse the implications and formulate trading strategies, with the result that most banks will have strategists working from 10pm when exit polls are published all the way through to 8am when the London market opens on Friday morning.
"I'm going to be working overnight," confirms one associate-level strategist at an international bank in London. "I don't have to, but I choose to," she adds. "I did it for Brexit and it was incredibly exciting. As the poll results come in, we'll start to communicate the implications to salespeople and traders. There are only a few of us who stay up and we work very closely together across teams. I'll stay around on Friday morning until everything's settled down and will then catch up on sleep on Friday afternoon or at the weekend."
Not all strategists are working straight through. The head of UK rates strategy at one European bank says he plans to, "Go home and vote, wait for the exit poll, get a few hours' sleep and then come back in around 3am as the results come in thick and fast. I've done it before and it's exciting and fascinating."
While strategists are most likely to be found at their desks at 2am, 4am, 5am and 7am, most traders simply plan to come in earlier than usual tomorrow morning. "A lot of us rates guys will have three or four hours' sleep," says a rates trader at a major U.S. bank in London. "It's always exciting because panic and volume can create very lucrative opportunities. There can be a lot of illusions and fictitious liquidity Things will often trade off-market and then you don't want to miss the dislocations on the open. You need to spend a lot time quantifying the relative value of the instruments you're trading. - Based on the outcome of the election, you price for where you think things will be after markets have settled, not where they are now or were when markets closed."
Another rates trader says he only plans to come in early if the Conservatives are defeated: "I will set my alarm to 2am when most marginal constituencies are counted. I'll take a taxi if a highly unexpected outcome looks set to materialise."
Credit traders are less likely to bust a gut - most are planning a start that's only slightly earlier than usual at around 6am. "The euro and GBP bond markets are closed overnight and only really open once the futures markets are open on the exchanges," says one. "We'll have a global morning meeting with research, traders and strategists tomorrow, but only at 6:30am."
He adds that outside the UK the British general election is less significant than the U.S. or the French elections or the Brexit vote: "It's really only about GBP crosses - the pound vs. the dollar or the euro vs the pound, and the FTSE," he says. "You don't see the same risk premia in euro crosses or dollar crosses or in the S&P or the Euro Stoxx. The overall impact of this is going to be fairly limited."