You are here: Home - Investing -

Bond yields surge as BoE silence disappoints

0
Written by:
05/09/2013
UK government bonds have hit a new two-year low after the Bank of England opted not to release further ‘forward guidance’ earlier this afternoon.
Bond yields surge as BoE silence disappoints

UK bond yields, which move in the opposite direction to prices, hit a two-year high of over 3% as investors predict the Bank will be forced to raise rates sooner than it expects.

With investors continuing to bring forward their rate rise expectations in spite of the Bank’s reassurance that rates will remain low for several years yet, some had expected the BoE to issue a statement alongside today’s policy decision.

But the decision, which saw the Bank keep quantitative easing on hold as expected, was not accompanied by the kind of statement seen in July, when policymakers said expectations of future rate rises were “not warranted”.

That pushed the yield on 10-year gilts to a two-year high of just over 3%, up from 2.88%.

Investors now predict the first UK rate hike will take place in October 2014, far earlier than the September 2015 date forecast before the introduction of forward guidance earlier this summer.

The pound also rose against the dollar in the absence of a BoE statement, reaching a two-week high against the dollar of $1.5663.

Gilts yields rose on a day when benchmark yields elsewhere were already moving higher.

Ten-year treasury yields also edged closer to the 3% mark, hitting 2.97% in early trading across the Atlantic.

German 10-year bund yields, meanwhile, rose above 2% for the first time since March 2012 earlier today, according to Tradeweb.

 

Tag Box

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Everything you wanted to know about ISAs…but were afraid to ask

The new tax year is less than a fortnight away and for ISA savers or investors, it’s hugely important. If yo...

Your right to a refund if travel is affected by train strikes

There have been a wave of train strikes in the past six months, and for anyone travelling today Friday 3 Febru...

Could you save money with a social broadband tariff?

Two-thirds of low-income households are unaware they could be saving on broadband, according to Uswitch.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week