A doveish tone to August’s MPC minutes and tame US inflation data enabled gilts to gain ground across the board.
Although publication of the Bank of England minutes revealed a 6-1 vote in favour of raising rates, economists were reassured from the accompanying comments that its members were in no rush to push through further increases.
However, the session’s best gains came in the afternoon, on the release of figures showing an expected 0.4 per cent rise in the US consumer price index. Further, the core inflation rate, which excludes energy and food, fell for the first time in four months.
The September gilt future gained 34p to £109.06 on turnover in 60,000 contracts. Treasury 4¼ per cent 2011 added 19p to £97.61, with Treasury 6 per cent 2028 up 61p to £122.33. The only new sterling issuance came from Germany’s KfW, which used Morgan Stanley to add a further £100 million to its 4¾ per cent 2010 bond.