"a fresh sell-off in the government bond, or gilt, markets. Alongside rising yields, meaning the government must pay more to service its debts, sterling was also declining on the foreign exchange markets, losing 1% against the dollar by mid-morning. This combination rising yields and a declining currency is often viewed as a warning signal of fragile investor confidence. The 10-year yields that the Office for Budget Responsibility (OBR) uses to forecast future borrowing costs were also on the rise,"
"An auction of 10-year gilts by the Treasury's debt management office on Tuesday the way the government borrows from markets was oversubscribed by 10 times. While that showed plenty of appetite for UK government debt, the yield was the highest since 2008. There are several reasons for the global drift upwards in longer-term yields, which include the acute budget crisis in France, stirrings of inflation in Japan, and above all, Donald Trump's extraordinary attacks on the independence of the Federal Reserve."
Yields on long-term UK government bonds have risen to levels last seen decades ago, forcing higher debt servicing costs. The pound fell about 1% against the dollar, and the OBR's 10-year yield measure reached 4.82%. Rising yields and a weaker currency often indicate fragile investor confidence, yet the trend is not unique to the UK. A Treasury auction of 10-year gilts was heavily oversubscribed, showing demand despite yields at their highest since 2008. Global drivers include France's budget crisis, early inflation pressures in Japan, and threats to Federal Reserve independence, which could undermine inflation-fighting credibility.
Read at www.theguardian.com
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