Strong data from America pushed UK government bonds lower, as traders speculated that the Federal Reserve would make more rate increases in the current cycle.
Both long and short-dated gilts ended down on the day after the US Commerce Department reported a 1.3 per cent increase in durable goods orders in December — ahead of forecasts. The figure was accompanied by an upwardly revised 5.4 per cent increase in November.
Weekly jobless claims data published at the same time also came in ahead of analysts’ expectations.
The sell-off came amid continuing strength in equity markets. The Debt Management Office sold £3 billion of 2011 gilts, but the auction met with a lacklustre reception from investors and was covered only 1.47 times.
The March gilt future closed 68p lower at £113.78. Treasury 4¾ per cent 2010 fell 16p to £101.91, while Treasury 8 per cent 2021 lost 96p to £143.70.