U.K. Government Bonds Drop for Eighth Day Before Inflation Data

U.K. 10-year bonds fell for an eighth day before a government report that economists said will show consumer-price inflation remained at the fastest since May, weakening the case for more central bank asset purchases.

Benchmark yields climbed to the highest level since October. Consumer prices rose 2.7 percent last month from a year earlier, matching the October reading, according to the median estimate of 34 economists surveyed by Bloomberg. Bank of England policy makers are due to release the minutes of their December meeting tomorrow. The pound rose to an 11-week high versus the dollar.

The 10-year yield climbed two basis points, or 0.02 percentage point, to 1.91 percent at 8:56 a.m. in London after rising to 1.92 percent, the highest since Oct. 25. The 1.75 percent bond due in September 2022 dropped 0.18, or 1.80 pounds per 1,000-pound ($1,621) face amount, to 98.58.

U.K. gilts handed investors a loss of 1.1 percent this month through yesterday, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. German bonds gained 0.2 percent and Treasuries declined 0.6 percent.

The pound gained 0.1 percent to $1.6214 after rising to $1.6218, the strongest level since Sept. 28. Sterling was little changed at 81.21 pence per euro.

The pound has strengthened 1.6 percent this year, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-market currencies. The euro declined 1.4 percent and the dollar fell 3.2 percent.

Bank of England officials kept the central bank’s asset- purchase target at 375 billion pounds and the key interest rate at a record low of 0.5 percent at their Dec. 6 meeting.

To contact the reporter on this story: Lukanyo Mnyanda in Edinburgh at lmnyanda@bloomberg.net

To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net

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