LONDON: Ten-year gilt prices rose strongly on Tuesday following some downbeat economic data, particularly from the United States, that prompted a rally in safe-haven government bonds.
By 1620 GMT the 10-year gilt yield was down around 3.5 basis points on the day at 1.48 percent, as the bond outperformed equivalent German debt but trailed behind surging U.S. Treasuries.
Gilts wavered following weaker-than-expected British economic growth data for the fourth quarter, but rallied strongly following after a gauge of U.S. business investment plans unexpectedly fell.
The yield spread between 10-year gilts and the equivalent German Bund tightened by more than a basis points on the day to 110 basis points.
On Wednesday, Britain's Debt Management Office is widely expected to hold a sale via syndication of the 0.125 percent 2058 index-linked gilt.
ADM Investor Services strategist Marc Ostwald said in a note to clients that pension funds would by forced to buy the bonds because of duration index extensions, even though buying them could be seen as a form of "insanity" with such negative real yields.
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