LONDON: British five-year government bond yields sank to their lowest level in more than four months on Wednesday, bolstered by an unexpected lowering of the country's pace of economic growth last year as well as by a rally in German bond prices.
Five-year gilt yields dropped 3 basis points on the day to 0.396 percent, a level last seen on Oct. 13, and prices for 10-year gilts also rallied, pushing yields to their lowest since Nov. 9 at 1.193 percent.
March gilt futures showed particular gains, up more than 60 ticks on the day to reach their highest since Oct. 13, as they chased an 90-tick gain on German Bund futures which were lifted by ongoing concern about the outcome of France's presidential elections.
Britain's Office for National Statistics revised down its estimate of 2016 growth to 1.8 percent from 2.0 percent, causing Britain to lose its spot as 2016's fastest-growing G7 economy.
Fourth-quarter growth was revised up to 0.7 percent from 0.6 percent, though business investment dropped by 1.0 percent over the period and economists expect consumers to come under increasing pressure as inflation picks up in 2017.
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