The UK Government bonds have declined and the 30-year yields have jumped up to its highest level in the last 9 months as it is expected that the housing report will be stating that the number of mortgage approvals increased in last month, thereby reducing the demand of the fixed income securities. The 30-year gilt yield increased by 2 basis points and is currently at 3.35%. At one point of time in the day, it actually jumped up to 3.36% marking its highest figure since 24th April. On the other hand, the 4.5% bond which is due in December, 2042 went down by 0.415 and is currently at 121.63. The 10-year yield of UK jumped up by 2.13%, marking the biggest surge since 4th January.
Jason Simpson, who works as a Rate Strategist for Banco Santander SA, stated that the gilt yields are all set to go even higher amidst a resurgence of the risk appetite, which is playing a pivotal role into the negative gilts theme currently. Jason added that the current lending numbers are above the consensus and it suggests that the credit conditions in UK are on an improving note. He commented that some of these will have been due to the Funding for Lending scheme as well.
Incidentally, investors are positive that the Bank of England is trying its best to spur growth in UK and the Funding for Lending scheme has, in particular, gained positive attention. This scheme encourages banks to offer more number of loans and this process is expected to help the economic recovery process of the country. As the European economic confidence improved with these attempts of the Bank of England, Pound, the major currency of UK has weakened to a 13-month low figure against that of Euro.
In December, the lenders of UK granted a total of 55,785 mortgages. This is the most number of mortgage approvals in a single month since January, 2012. In the current month, the house prices have jumped up by 0.22% after experiencing a decline of 0.1% in December. The official report to be released by the Nationwide Building Society however is scheduled to be released on the last day of the current month.
Sterling is currently priced at 85.98 pence per Euro, marking its weakest figure since 7th December, 2011. Today, it has declined by 0.5%.