The yield on ten-year gilts ticked back up towards last month’s 4¾ per cent 12-month high as stronger than expected US construction data triggered fresh selling.
After trading sideways for much of the morning, bond markets lurched downwards in the afternoon on the release of figures showing that US housing starts unexpectedly rose 5 per cent in May. With fears of further US monetary tightening again to the fore, the September gilt future shed 42p to £108.82 on turnover in 61,000 contracts. Treasury 4¼ per cent 2011 lost 20p at £97.63, with Treasury 6 per cent 2028 off 89p at £121.59. The Debt Management Office confirmed the size of Tuesday’s auction of 1¼ per cent index-linked 2027 as £900 million. Among new issues, Clydesdale Bank sold a £350 million five-year floating rate note, while Network Rail increased the size of its 478 per cent 2015 bond by £250 million. BP and Germany’s KfW both sold £50 million of new paper.