Howard’s immigration plans please the punters

After weeks of steady decline on the spread markets the Tory price has staged a small recovery as punters seek to get in at what they see as bargain prices.

IG Index this evening marked Michael Howard’s party up two seats as punters took stock of the policy line-up on immigration and Labour’s two point drop in the Guardian ICM poll. There’s also a realisation that a Labour buy bet on 364 seat – a majority of 81 – is much riskier with the party only being nine points ahead of the Lib Dems, as seen in the weekend’s YouGov poll.

We think that a Tory buy bet at 192 seats is good value. If you want to bet on the Tories now might be the time to do it.

A number of potential Tory buyers who’ve been in contact with me have been waiting for the price to bottom out and I expect further moves in Michael Howard’s direction – particularly on Friday if the January Yougov poll in the Daily Telegraph, the first survey to be taken after the Tory immigration plan, is similar to the one at the weekend or shows a further move away from Labour.

This will be reinforced by a big change that’s likely in Martin Baxter’s uniform national swing prediction which has not yet factored in the latest ICM poll and is still using the December YouGov poll which had Labour higher and the Lib Dems on 21%. We expect this to get near or even go below a predicted 100 seat Labour majority for the first time in months.

Sentiment could change a bit in the other direction on Sunday with the Communicate Research survey due in the Independent on Sunday but the markets tend to take less notice of this pollster than YouGov or ICM.

Latest IG Index spread prices: LAB 357-364 (-1): CON 185-192 (+2): LDs 71-75. There will be 646 seats in the next House of Commons so to win a majority a party needs to get 323 seats or more.

To bet you “buy” at the high figure in the spread and you win the level of your unit stake multiplied by the number of seats in excess of the price you bought. Thus if Labour got 380 seats and you bought with a stake of £20 at 364 you would win 16 times £20 = £320. Your losses are calculated in the same way if Labour ended up with less than 364 seats.

Mike Smithson