Government Bonds in UK See Drops for 8th Day on a Row

For the 8th day consecutively now, UK 10-year bonds have seen a decline. Incidentally, a Government report on inflation data is all set to come out soon, however, economists believe that the same will not help in lowering the consumer-price inflation. Rather, the same is expected to stay at its fastest growth rate since last May. Therefore, it is expected that the case for further Central Bank asset purchases will weaken.

The benchmark yields of UK have climbed up to its highest value since last October. According to a recent survey concluded by a number of famous UK economists, the UK consumer prices have went up by 2.7% in November, in comparison with what it was in November, 2011. This kind of matches the data of October. Incidentally, the policy makers of the Bank of England are all set to release their December meeting minutes on tomorrow. On the other hand, the major currency of England, Pound has marched to an 11-week high against USD. It is at $1.6128 per USD now, its strongest value since 28th September. It was more or less unchanged against Euro and is at 81.21 pence per Euro currently.

The 10-year UK yields have gone up by 2 basis points and are at 1.91% currently. Incidentally, earlier today, it rose to 1.92%, its highest value since 25th October; however, saw a slight decline at a later time. The 1.75% percent bond which is due in September 2022 plummeted by 0.18 and is at 98.58 now.

Till yesterday, a total loss of 1.1% was experienced by the investors on UK gilts. The result was released by the European Federation of Financial Analysts Societies. On the other hand, the German bonds saw an increase of 0.2%. However, the Treasuries plummeted by 0.6% on a whole.

Overall, Sterling has strengthened by 1.6% in 2012 so far, based on the results published by the Correlation-Weighted Indexes. These indexes track a total of 10 currencies from developed markets. Based on these indexes, USD plummeted by 3.2% and Euro went down by 1.4% in 2012.

On the 6th December meeting held, the officials of Bank of England decided to keep the key interest rate at 0.5%, a record low figure. Additionally, the officials also kept the target for bank’s asset-purchase program at 375 billion Pounds.