A bounce in stock markets and further strong US economic data triggered selling of gilts across the board.
UK government bonds got off to a weak start after Wednesday’s after-hours dip in US Treasuries, but only continued lower as a rebound in equities gathered pace. The selling peaked in the afternoon on an above-forecast New York manufacturing survey and lower than expected jobless claims.
The September gilt future shed 68p to £109.57 on turnover in 85,000 contracts, a tally that might be considered unusually strong given the closure of German bond markets for the Corpus Christi holiday. Treasury 4¼ per cent 2011 dropped 37p to £98.01, with Treasury 6 per cent 2028 off 128p at £122.96. Among corporate issuance, France’s AXA confirmed that it would sell sterling and euro-denominated hybrid perpetual bonds to help to finance its £5.4 billion purchase of Switzerland’s Wintherthur.