Gilt sales surge as US treasury yields hit record low

The Debt Management Office has raised almost half of its bond sales target for this financial year in just four months on continued strong demand for gilts.

Yesterday the DMO sold £3.75bn of 2.75% Jan 2015 gilts, which was covered 1.99 times. The strong demand for gilts has driven yields on the benchmark 10-year gilt down to just 3.28%. In the US, yields on short-term treasuries have fallen to the lowest in history on growing expectations of extra stimulus from the Federal Reserve. Two-year rates fell to 0.52%, as investors continue to look to the 'safe haven' asset class after weeks of poor economic data, The Telegraph reports. The US saw a sharp drop in GDP growth to 2.4% in the second quarter, while factory orders fell 1.2% in Ju...