A rally in oil prices, a sell-off in equities and weak domestic data triggered further strong demand for gilts.
As with previous sessions, demand for gilts was strongest among long-dated maturities, with pension funds scrabbling to pick up stock amid a dip in yields to maintain their match of assets and liabilities. That squeeze is expected to produce strong demand in next Tuesday’s auction of a £650 million 1¼ per cent 2055 index-linked gilt, and prompted suggestions that the Debt Management Office is coming under pressure to increase the size of the sale.
The March gilt future touched £116.08, before closing 13p higher to £115.57 on brisk turnover in 95,000 contracts. Treasury 4¾ per cent 2010 shed 4p to £102.48, against a 54p rise to £134.07 at Treasury 6 per cent 2028. Bear Stearns sold a £225 million 458 per cent 2011 bond through HSBC and RBC Capital. Australia’s St George Bank sold a £375 million 2011 floating rate note.