Short-dated gilts came away with the best gains as long-dated issues succumbed to profit-taking before next week’s £2.5 billion 2055 auction.
UK government bonds initially traded higher on weak equity markets, but drifted back in the afternoon to close broadly unchanged. Within that trend, long-dated maturities faltered as investors opted to lock in gains before next Thursday’s bond sale, and instead switched into shorter-dated paper to pick up yield. Further, although no change in interest rates is expected today, investors hope next week’s Bank of England inflation report could provide greater clarity on the timing of a rate cut. The March gilt future rose 2p to £113.50 on turnover in 45,000 contracts. Treasury 4¾ per cent 2010 added 4p to £101.79, with Treasury 6 per cent 2028 off 8p at £129.34. Spain’s BBVA used Barclays and HSBC to sell a £300 million 2010 floating rate note and a £200 million 4¾ per cent 2010 bond.