LONDON: Long-dated British government bond yields touched record depths on Wednesday after data showed inflation fell to its lowest level in more than 14 years, prompting investors to add to bets that the Bank of England will raise interest rates only in 2016.
In another sign of markets pushing back expectations of when British interest rates are likely to go up, the premium that 10-year gilts offer over the equivalent German Bund sank to its lowest point in nearly a year at 104.4 basis points.
Twenty-year and 30-year gilt yields hit new record lows of 2.072 percent and 2.250 percent after data showed Britain's consumer price index slid to a lower-than-expected 0.5 percent in December, before recovering slightly.
The 10-year gilt yield bottomed at 1.506 percent, its lowest since August 2012, and was down around 3 basis points on the day at 1.55 percent at 1122 GMT.
Demand for British government bonds has increased in recent days, along with German Bunds and U.S. Treasuries, on expectations that the European Central Bank will soon start buying euro zone government bonds.
Comments
Comments are closed for this article.