BLBG:Gilts Slip After House-Price Gauge Reaches 19-Month High as Pound Climbs
U.K gilts fell as a house-price index climbed to a 19-month high in February and stocks rose across Europe, sapping demand for the relative safety of fixed- income assets.
The declines pushed the 10-year yield up from the least this month. The pound strengthened against the euro and snapped a two-day drop versus the dollar after the Royal Institution of Chartered Surveyors home-price gauge increased 3 points from January to minus 13, the strongest reading since July 2010.
“Gilts are moving in sympathy with the other markets,” said Sam Hill, a fixed-income strategist at Royal Bank of Canada’s RBC Capital Markets unit in London. With stocks rising in the U.K. and Europe, “it’s no surprise to see gilt yields slightly higher,” he said.
The yield on the 10-year gilt rose two basis points, or 0.02 percentage point, to 2.12 percent at 10:12 a.m. London time, after slipping by six basis points yesterday to the lowest since Feb. 28. The 4 percent note due in March 2022 fell 0.195, or 1.95 pounds per 1,000-pound ($1,567) face amount, to 116.895.
Britain’s benchmark stock index, the FTSE 100, rose 0.8 percent while the Stoxx Europe 600 Index gained 1.1 percent.
German Investor Confidence
Gilts slipped with German bunds after a report showed confidence in Europe’s largest economy improved more than economists forecast. Demand for safety also waned as euro-area finance ministers endorsed a second Greek bailout. The German 10-year bond yield increased two basis points to 1.77 percent.
The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict economic developments six months in advance, rose to 22.3 from 5.4 in February. Economists said it would climb to 10, according to the median estimate in a Bloomberg News survey.
The pound rose 0.2 percent to $1.5665. It fell to as little as $1.5603 yesterday, the weakest level since Jan. 25. Sterling gained 0.3 percent to 83.83 pence per euro.
U.K. bonds have lost 0.5 percent this year as signs that Europe is making progress in solving the debt crisis reduced demand for safety, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. German bonds made 0.4 percent, while Italian securities handed investors a 13 percent gain, the indexes show.
To contact the reporter on this story: Lukanyo Mnyanda in Edinburgh at lmnyanda@bloomberg.net
To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net
