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Markets

UK bond yields head for biggest weekly rise since June

  • Based their latest level they are on course of just under 17 basis points the biggest since the week to June 5.
  • Sterling also rose above $1.40 for the first time in nearly three years on Friday although it was flat against the euro.
19 Feb 2021

LONDON: British government bond prices fell again on Friday as a global debt sell-off continued on expectations of hefty US fiscal stimulus, putting gilt yields on course for their biggest weekly rise since June.

The spread between yields on British 10-year debt and its German equivalent widened to 100 basis points for the first time since March, partly reflecting the faster roll-out of COVID vaccines in Britain which has lifted some of the country's economic gloom.

Ten-year gilt yields peaked at 0.693% at 1429 GMT, their highest since March 20 during the so-called "dash for cash" at the onset of the pandemic.

Based their latest level they are on course of just under 17 basis points the biggest since the week to June 5.

Sterling also rose above $1.40 for the first time in nearly three years on Friday although it was flat against the euro.

Gilt yields surged at the start of the COVID pandemic due to a scramble for US dollar assets, until the Bank of England calmed markets by restarting its bond purchase programme.

If yields stay where they are, February will see the biggest increase in 10-year gilt yields since October 2016, when markets judged Britain's referendum vote to leave the EU was having less of an immediate impact on the economy than first thought.