UK secures record orders for bonds as inflation drops to 4.6pc
Investors acquired a record £93bn of UK government bonds during a sale today, it has been reported, as investors bet that interest rates have peaked.
Article originally published by The Telegraph. Hargreaves Lansdown is not responsible for its content or accuracy and may not share the author's views. News and research are not personal recommendations to deal. All investments can fall in value so you could get back less than you invest.
Published by
17 Nov 2023
The sale of 20-year gilts fetched the largest ever level of orders for UK sovereign bonds, excluding the first ever sale of “green bonds” back in 2021, according to Bloomberg News.
The sale of the bonds, which mature in 2043, was conducted by Barclays, HSBC, Lloyds, Morgan Stanley and UBS.
The race to snap up bonds comes as investors bet that interest rates will begin to fall next year amid falling inflation.
The UK consumer prices index (CPI) dropped sharply to 4.6pc in October from 6.7pc the previous month, according to the Office for National Statistics (ONS), after a slowdown in the increasing cost of gas and electricity.
As a result, money markets are pricing in that the Bank of England will begin cutting interest rates by a quarter of a percentage point by June at the latest, with some economists predicting rates will be cut sooner.
When interest rates are high, the yield on bonds-the return for investors-is higher and vice versa.
Global bonds have rallied in recent days as traders ramp up bets that central banks will begin cutting interest rates next year, with 20-year gilts now yielding around 4.6pc, down from a peak above 5pc last month.
This article was written by Alex Singleton, Chris Price, Matthew Field, Adam Mawardi, Riya Makwana and Howard Mustoe from The Telegraph and was legally licensed through the DiveMarketplace by Industry Dive. Please direct all licensing questions to legal@industrydive.com.
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Article originally published by The Telegraph. Hargreaves Lansdown is not responsible for its content or accuracy and may not share the author's views. News and research are not personal recommendations to deal. All investments can fall in value so you could get back less than you invest.