U.K. government bonds rose for a third day, pushing 30-year gilt yields to a record low, as the slowest U.K. inflation in almost 15 years caused traders to abandon bets on higher Bank of England interest rates. A gauge of the outlook for U.K. inflation touched the lowest in more than two years as factory-gate prices, a leading indicator, fell the most in five years. The weakening price growth adds to data signaling Britain’s recovery is losing momentum, keeping the pound about 0.9 percent from an 18-month low versus the dollar. “Inflation is slowing very sharply and the market is rightly anticipating, largely as a result of that, that the prospect of monetary tightening has disappeared over the horizon now,� said John Wraith, head of U.K. rates strategy at UBS Group AG in London. “It keeps yields declining.� The rate on 30-year gilts dropped four basis points, or 0.04 percentage point, to 2.27 percent at 12:31 p.m. London time and touched 2.248 percent, the least since Bloomberg began collecting the data in 1996. The 3.25 percent bond due in January 2044 rose 0.99, or 9.90 pounds per 1,000-pound ($1,517) face amount, to 120.70. Benchmark 10-year yields fell to 1.51 percent, the lowest level since August 2012. The 10-year break-even rate, which provides a gauge of inflation expectations by measuring the yield difference between gilts and index-linked securities, dropped to as low as 2.45 percentage points, the least since October 2012. Sterling was little changed at $1.5170 after sliding to $1.5035 on Jan. 8, the lowest level since July 2013. The pound advanced 0.4 percent to 77.71 pence per euro. To contact the reporter on this story: Lucy Meakin in London at lmeakin1@bloomberg.net To contact the editors responsible for this story: Paul Dobson at pdobson2@bloomberg.net Keith Jenkins, Mark McCord

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