FURTHER evidence of a cooling of the UK housing market enabled gilts to advance in an otherwise lacklustre session.
UK government bonds initially took their cue from a report from the British Bankers’ Association, which showed the number of new loans approved for house purchases in July falling more than 20 per cent both on the previous month and on July 2003. That data was taken as a sign that the Monetary Policy Committee’s recent rate tightening policy was starting to take effect, and could mean that interest rates are now near their peak.
However, short-dated maturities were held back from better gains by comments from the CBI that conditions for UK manufacturers had improved slightly during August, with factory order books rising to a six-year high after two weak months.
The wider market was underpinned by the early investment of cash that will be returned in £2.3 billion of coupon payments on September 7, with the September gilt future up 7p at £107.04. Again, volume in 89,000 contracts was weighted towards the December amid continued rollover activity.
Of benchmark cash issues, Treasury 4 per cent 2009 ticked up 2p at £96.30, with Treasury 6 per cent 2028 up 15p at £118.29. There were no new corporate issues in the sterling market.