U.K. 10-year government bonds dipped for a third
day before Bank of England Governor Mark Carney and fellow policy makers
testify to lawmakers on the central bank’s August Inflation Report.
Yesterday at the annual conference of the Trades Union Congress
Carney told delegates that they should prepare for borrowing costs to
rise from a record-low 0.5 percent, otherwise the BOE’s aim of keeping
inflation at 2 percent will be at risk. That’s even as speculation next
week’s referendum may lead to an independent Scotland has pushed back
market expectations for higher interest rates.
The pound approached a nine-month low versus the US counterpart.
Yields on 10-year gilts increased three basis points, or 0.03 percentage point, to 2.50 percent at 9:50 a.m. London time. The 2.75 percent bond due in September 2024 fell 0.22, or 2.20 pounds per 1,000-pound ($1,609) face amount, to 102.16. Two-year rates rose two basis points to 0.80 percent.
Gilts returned 6.8 percent this year through yesterday, Bloomberg World Bond Indexes show. That compares to a 6.7 percent gain for German securities, while Treasuries earned 3.7 percent.
The pound fell 0.1 percent to $1.6094 after declining to $1.6060 yesterday, matching the lowest since Nov. 15, 2013. Sterling was little changed at 80.36 pence per euro.
As tracked by Bloomberg Correlation-Weighted Indexes, the sterling has fallen 1.9 percent in the past month, the worst performer after the Japanese yen among 10 major currencies.
