The gilt market was returned to its pre-Liz Truss mini-budget level shortly after Rishi Sunak was declared as Tory leader.
Gilts, or UK government bonds, are an essential part of our financial markets.
Following the mini-budget, the Bank of England was forced to intervene to prevent the gilt market from worsening.
UK government bonds were already staging a rally as Monday began and this rally became more aggressive as it became clearer that Rishi Sunak would likely face an unopposed run to the top job, business reporter Sharon Marris writes.
The 30-year gilt had been pummelled after Kwasi Kwarteng’s mini-budget in September but it recovered late on Monday to levels seen before Mr Kwarteng’s tax-cutting plans had prompted a markets meltdown.
Investors are betting that Mr Sunak, a former chancellor with a background in finance, will stick with the economic policies announced by current chancellor Jeremy Hunt, which have calmed the markets in recent days.