Gilt yields sink below 0.1%
Investors in German government debt are getting virtually nothing for their money. The yield on the benchmark 10-year bund slipped below 0.1% for the first time on Tuesday.
It is the latest sign of how investors are rushed to safe havens, pushing yields on government debt lower and lower. The yield on the 10-year U.S. Treasury bond has fallen below 2%, a level not seen since late October.
The euro zone's economy is struggling with low inflation, and there is growing speculation that the European Central Bank will launch a full-scale stimulus program as soon as next week. That has pushed down the yield on German debt, considered one of the safest investments in the world.
"There is simply no return to be had in Germany," said Lorne Baring, managing director at B Capital Group, an investment firm in Geneva. "An investor in German government bonds is essentially voting for deflation."
The yield on 10-year Bunds fell to 0.075% from 0.083% late Monday, according to Tradeweb. The yield on 30-year bonds slid to 1%.
Investors flock to gilts as global recession fears mount
-
Investors are flocking to the safety of gilts, with the 10-year yield hitting a record low on Friday.
-
This comes amid mounting fears of a global recession, with economists warning that the world economy is teetering on the brink of another downturn.
-
The yield on the benchmark 10-year gilt hit 0.402% on Friday, its lowest ever level.
-
Yields fall as prices rise, so this indicates that investors are demand for gilts has surged in recent weeks.
-
The flight to safety has also been driven by concerns about Brexit and the prospects of a no-deal exit from the EU.
-
Some investors are concerned that a no-deal Brexit could lead to a sharp economic slowdown in the UK.
-
The Bank of England has also warned that a no-deal Brexit could lead to a recession in the UK.
Gilts outperform other government debt as eurozone crisis deepens
| The yields on British government debt known as gilts have hit record lows as investors seek safe havens from the eurozone crisis |
| Gilts offer a higher yield than other government debt, and are seen as less risky due to the UK's stable economy |
| The Bank of England has hinted that it could be forced to restart quantitative easing if the eurozone crisis continues to deepen |
The yields on British government debt known as gilts have hit record lows in recent weeks as investors seek safe havens from the deepening eurozone crisis. Gilts offer a higher yield than other government debt, and are seen as less risky due to the UK's stable economy. The Bank of England has hinted that it could be forced to restart quantitative easing if the eurozone crisis continues to deepen.
UK debt sales: Demand for gilts weakens as yields fall
UK debt sales: Demand for gilts weakens as yields fall The Bank of England (BoE) sold £3.3 billion of government bonds, known as gilts, on Wednesday, with demand weaker than at previous auctions as yields have fallen in recent weeks.
The Debt Management Office (DMO) said it had sold all £3.3 billion of the two-year gilts on offer, but the average yield was 0.811 percent, up from 0.797 percent at the last auction on March 1.
The DMO also said it had sold all £1 billion of the five-year gilts on offer, but the average yield was 1.326 percent, down from 1.393 percent at the last auction on March 1.
Investors are buying government debt because it is seen as a safe investment in a time of global uncertainty, with yields falling as they buy more bonds. This has pushed up the price of government debt and reduced the return to investors.
The BoE has been selling more short-dated bonds in recent months and reducing its holdings of longer-dated ones to help reduce volatility in debt markets and keep borrowing costs low.
Yields on 10-year gilts fall below 1% for first time ever
The yield on 10-year gilts has fallen below 1% for the first time in history, as investors continued to flock to government debt amid concerns over the global economy.
The yield on 10-year gilts stood at 0.994% on Monday morning, down from 1.004% on Friday. The yield curve – which charts the difference in yield between different maturities of government debt – has been flattening in recent months as investors demand longer-term debt.
Yields on two-year gilts also fell below 1% for the first time on record, hitting 0.954% on Monday morning.
The rise in yields on longer-term debt suggests that investors are growing increasingly confident about the economic prospects of the UK, despite global headwinds.
"The move below 1% in 10-year yields is a watershed moment and reflects just how worried investors are about the global economy," said Luke Bartholomew, investment manager at Aberdeen Asset Management.
He added: "UK Gilts have been one of the few safe havens around in recent months and this is only likely to increase as we see more volatility in markets around the world."
Cap comentari:
Publica un comentari a l'entrada