Stronger than expected US inflation data meant that all but the longest-dated gilts traded lower on the day. Fears that the US core consumer price index for May would come in above forecast were fulfilled, with the benchmark rising 0.3 per cent — its third such rise in a row — against the 0.2 per cent predicted by economists.
However, gilts outperformed their continental peers on the release of unexpectedly weak UK employment data. Figures from the Office for National Statistics showed the jobless rate hitting a 3½year high. The June gilt future shed 13p at £110.25 on turnover in 68,000 contracts. Treasury 4¼ per cent 2011 dipped 7p to £98.38, with Treasury 6 per cent 2028 up 6p to £124.21.
Among new issues, Coventry Building Society sold a £120 million fixed-to-floating rate note through Barclays and Royal Bank of Scotland. The bond initially pays a 6.092 per cent coupon and can be called in 2016. Bank of Cyprus sold a €300 million 2009 floating rate note.