Gilts rally on £20bn issuance reduction

The UK gilt market rallied in the run-up to the Budget and while Osborne was giving his speech, but this initial growth spurt now seems to have moderated.

M&G's head of retail fixed income Jim Leaviss says: "Gilts rallied into and during the Budget, but by the end the market realised it had got a bit ahead of itself. "The Debt Management Office revealed that gilt issuance was only being reduced by £20bn, and the market was a bit disappointed that it was not more." Gilt issuance is set to be cut to £165bn, a smaller reduction than some commentators expected. "The gilt market is strong again. We are seeing the lowest yields since Q3 last year. Ten-year gilt yields are heading towards 3.63%, down from 4.25% in March this year. The big r...