Gilt yields move past 2% to hit eight-month high

Benchmark 10-year gilt yields have moved back above 2% for the first time since last May as the equity rally is mirrored by a sell-off in core government bonds.

Having risen 16 basis points yesterday to 1.99%, the 10-year yield rose a further two basis points in this morning's trading to reach its highest level in eight months. Yesterday's move, the largest daily spike since 3 September, was fuelled by news of a compromise deal in the US to avert the bulk of the ‘fiscal cliff' budget cuts. The positive sentiment also helped push sterling to a 16-month high against the dollar of almost $1.64, before falling back to $1.62 this morning. Treasuries and German bund yields also moved higher yesterday: 10-year treasury yields rose from 1.76% to 1...