GILTS finished lower after a stronger than expected US consumer sentiment index and second-quarter GDP data outweighed the effects of a below-forecast UK consumer confidence survey.
GfK Martin Hamblin was behind the morning advance in UK government bonds as its monthly barometer of domestic consumer sentiment fell from -3 to -5 in August, its lowest level since last December. However, profit-takers moved swiftly in, and were given further ammunition for the selling on the release of US GDP downward data that were not as weak as some pessimists had been expecting.
Further, the University of Michigan’s August consumer sentiment index was revised up to 95.9. Short-dated maturities held up best, with Treasury 4 per cent 2009 finishing unchanged on the session at £96.30. That resilience contrasted with a retreat in medium and long-dated issues, where Treasury 6 per cent 2028 lost 23p at £118.04. The September gilt future shed 3p at £107.71.
Among sterling new issues, KfW, the German state development bank, sold a £150 million 5 per cent 2024 bond through RBC Capital and increased the size of its 4½ per cent 2008 bond by £100 million through Dresdner Kleinwort Wasserstein. EIB used HSBC to add £150 million to its 5 per cent 2006 issue.