Strong overnight demand in a US Treasury auction and weaker than expected UK average earnings data triggered a relief rally in gilts.
It was the ten-year US sale which intitially buoyed UK government bonds, but the domestic pay numbers — which revealed an acceleration in earnings growth to 4.4 per cent in July, below economists forecasts’ of a rise to 4.5 per cent — which sustained the gains through to the close. Ten-year maturities enjoyed the best performance, with the December gilt future rising 30p to £109.75 on turnover in 69,000 contracts. Treasury 4¼ per cent 2011 put on 11p to
£97.95, with Treasury 6 per cent 2028 up 58p to £124.19. Among sovereigns, Italy priced a $3 billion 5¼ per cent 2016 bond. Italy’s Banca Lombarda sold a €750 million 2013 bond. France’s Vivendi Universal issued €1.2 billion of new paper through Citigroup and JPMorgan.