The UK government bond market has shown resilience in reaction to the Budget and inflation soaring to 4.4% in February, offering a safe haven for investors, says M&G's Mike Riddell.
The price of UK 10-year government bonds stayed higher after the country's growth forecast for the year was slashed from 2.1% to 1.7% in George Osborne's Budget.
Strong buying of government debt by the UK's banking sector is needed to prevent a rise in gilt yields as overseas demand wanes, says Simon Ward, the chief economist at Henderson Global Investors.
Government bond markets are continuing to sell off strongly this morning as investors absorb the extra $1trn of debt added to the US balance sheet by the extension of its tax cuts.
Gilt yields have spiked following the Bank of England's inflation report, which suggested the UK will see higher inflation in the near-term.
The Federal Reserve is set to embark on a programme of measured quantitative easing next week, avoiding the ‘shock and awe' system used during the financial crisis.
Gilt yields have spiked strongly today after the UK recorded twice the expected growth in the third quarter.
The new so-called 'currency vigilantes' hit sterling hard yesterday, on a day when gilt yields dropped to a new record low.