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Gilt yield jumps to post-Brexit high

Oct. 14, 2016 12:52 PM ETEWU, FXB, GBB-OLD, EWUS, FKU, DXPS, DBUK, QGBR, HEWUBy: Stephen Alpher, SA News Editor
  • "People are getting nervous about a number of things,” says the head of U.K. rates strategy at UBS. Among them are lower overseas interest as the pound plunges, and questions about the future of the Bank of England's asset purchase program as the government comes out against it.
  • The 10-year U.S. Gilt yield climbed another seven basis points today to 1.10% - now up about 50 basis points in less than a month, and now above its pre-Brexit level.
  • Other government bond markets have had a rough time of it lately as well, but nothing on the scale of the U.K. "The U.K. is massively underperforming,” says an Allianz money-manager. "If the BOE stops doing quantitative easing, and monetary stimulus is replaced by additional fiscal stimulus, then bear steepening of the gilt yield curve is entirely warranted."
  • The FTSE climbed 0.5% today, underperforming broader Europe which gained 1.3%.
  • ETFs: FXB, EWU, GBB, EWUS, FKU, DXPS, DBUK, QGBR, HEWU

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