LONDON: British government bond prices rose on Monday morning in line with German Bunds, with investors set to focus on inflation and retail sales data later in the week after halting a New Year sell-off.
Several analysts said bonds with maturities longer than 15 years would suffer ahead of a syndicated sale of the 2044 bond this month, especially given what some said was recent out performance compared to shorter-dated paper.
Fixed-rate gilts sold off sharply at the end of 2012, hit by worries over further slippage on the government's budget targets and the evaporation of hopes for another round of bond-buying from the Bank of England.
But prices inched up over the course of a roller-coaster first full trading week of 2013 and at 0901 GMT on Monday the March long gilt future was another 30 ticks higher at 116.56, almost precisely duplicating a rise for Bunds, which gilts often track.
The gains were in part due to another batch of bearish data on the British economy, encouraging hopes the BoE could yet deliver more monetary easing later this year.
"Focus this week will be on the retail sales and inflation numbers," analysts from Lloyds said in a morning note to clients.
"Given the upcoming 2044 syndication, we believe that the curve will have to take the strain going into the supply event. We look for 5s30s curve to steepen over the coming weeks, as the front end will also remain anchored."
They also said 30-year gilts looked overpriced compared to equivalent US Treasuries. Yields on them were 2 basis points lower in morning trade, compared to a more than 3 basis point fall for the 10-year paper.
Inflation data is due to on Tuesday and is seen holding steady at 2.7 percent - high enough to worry the central bank into holding off on more easing, but well off levels above 4 percent seen in recent years.
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