Gilts drifted lower as bond markets were becalmed by the closure of Wall Street for Labor Day.
With fresh economic data thin on the ground, the session’s dominant feature proved to be the spectre of £2.25 billion of new paper hitting the market today through the Debt Management Office’s auction of Treasury 4¼ per cent 2027. With investors making room in their portfolios for the newly minted stock, long-dated issues came away with some of the day’s worst losses. Rallying equity markets made for further weakness.
The September gilt future shed 20p at £110.08 on paltry turnover in 18,000 contracts, which betrayed the absence of US investors. Treasury 4¼ per cent 2011 dropped 5p at £98.21, with Treasury 6 per cent 2028 off 50p at £124.48.
Among corporates, Gallaher, the cigarette maker, prepared the ground to sell a benchmark seven-year euro-denominated bond. The roadshow will begin on September 14.