gilts

Henderson's John Pattullo and Jenna Barnard have closed out short duration positions in gilts and treasuries after revising their interest rate expectations.

Artemis' James Foster has taken off a 12% short position in UK gilts and US treasuries in the past few weeks, in the view the MPC will not hike rates until August.

Sterling has strengthened against the dollar as a report revealed UK consumer confidence increased in March from record lows, boosting the Bank of England's case for an interest rate hike.

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.

ON BONDS

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.