The Government bonds of UK have plummeted and the 2-year yields have gone up to the highest figure of last 2 weeks. An Industry Report came up stating that the British house prices have increased in this month, thereby reducing the demand for safer assets among the investors. On the other hand, the 10-year bond yields have also increased, going towards its highest value in last 7 days. Incidentally, the Debt Management Office of UK is scheduled to auction $2.77 billion right on this week. The British gilts have also gone down as the European stock prices have increased, thereby enhancing the higher yielding asset’s appeal to the investors. The major currency of UK, Pound has declined against USD for the 7th day on a row. According to analysts, Pound may decline to $1.5630 by end of March and to $1.5260 by end of the current year. Incidentally, the Bank of England is all set to release the minutes of its January meeting right on this week. Additionally, the British Government has already reported growth for the 4th quarter of last year.
According to the Rates Strategist of Monument Securities, Marc Ostwald, the outlook in United Kingdom is more of an inflation oriented unlike many other countries. Marc added that the UK market is very thin at this point of time and probably investors are waiting to see the events to happen in UK right on this week and then decide on further trading.
The 2-year British yields have jumped up by 4 basis points and are at 0.42% currently. This marks its highest value since 3rd January. The 5% bond which is scheduled to mature in September, 2014 experienced a drop of 0.075 and is at 107.40. The benchmark 10-year yield has also jumped up to its highest figure since 11th January after increasing by 2.06%.
The British home prices increased by 0.2% throughout the country in January, 2013 after experiencing a decline of 3.3% in last month. If the asking prices of the same time in 2012 are concerned, same has surged ahead by 9.7% marking its biggest annual increase since February, 2010. The UK Break Even rate went ahead by 2 basis points and is currently at 3.06%. Incidentally, Break Even rate determines the difference in yield between the nation’s 10-year gilts and the index linked securities.