British Gilt Yields Rise from 7-Month Low

British gilts experienced decline with the 10-year yields jumping from its lowest level in last 7 months. European peripheral bond markets experienced gains and it kind of damped demand for the British Government’s debt’s relative safety. Sterling, for the 1st time in last 3 days, declined against Euro after a report came out stating that the UK business sentiment and intentions showed improvement on the last month. The 10-year bonds of Italy increased for the 6th straight day, whereas, the 2-year yields of Spain declined to the lowest level since October, 2010. The Bank of Japan has undertaken a plan of purchasing monthly bonds worth 7.5 trillion Yen and many feel that this will boost investor appetite for higher returns.

According to the Fixed Income Strategist of Royal Bank of Canada, Sam Hill, as the peripheral bond spreads are tightening again, it seems that the effect of Bank of Japan intervention is set to boost bonds in the periphery relative to those of the core safe haven Governments. Hill added that the data calendar of UK looks light at this point of time.

The 10-year British gilt yields increased by 7 basis points and these are currently at 1.70%. It dropped to a low figure of 1.63% at an earlier time matching the low experienced on 5th April; however, at later point of time, it pared the losses. On the other hand, the 1.75% bond which is due in September, 2022 experienced a tumble of 0.59, thereby taking it to 100.44.

An index measuring the UK confidence increased to 92.2 in March from the previous month’s value of 90.6. The data was released by the accountancy department of BDO LLP. The output index, however, is still lower than 95 (It is currently at 93). Incidentally, index with value of 95 indicates positive growth one quarter ahead.

In 2013, Sterling has experienced a decline of 4.5% so far. Among the other major currencies, USD has increased by 2.6%, for Euro, the rise has been of 0.9%. As far as the statistics of the European Federation of Financial Analysts Societies are concerned, the British gilts, so far has returned 2.4%. On the other hand, the German bonds have increased by 1.1%, whereas, the Treasuries experienced a gain of 0.7%. 3.5 billion Pounds will be sold by the Debt Management Office of UK on tomorrow.