- Rally in S&P 500 reduces demand for the safest government debt
- Benchmark 10-year yield extends advance from four-month low
U.K. government bonds fell for a second day with Treasuries as a rebound in U.S. stocks made investors more optimistic that the global equities rout is coming to an end.
Ten-year gilt yields climbed, extending their advance from Friday’s almost four-month low, as the rally in the Standard & Poor’s 500 Index reduced appetite for the safest fixed-income securities. Even as shares in Asia and Europe struggled to find a floor, investors speculated that China’s interest-rate cut on Tuesday will calm markets.
“There’s been an awful lot of volatility in all markets in recent days,” though since China acted there’s been a “dialing-down of the overall level of risk-aversion,” said John Wraith, head of U.K. rates strategy at UBS Group AG in London.
The yield on the 10-year gilt rose five basis points, or 0.05 percentage point, to 1.96 percent as of the 5 p.m. London close. The 2 percent security due in September 2025 fell 0.44, or 4.40 pounds per 1,000-pound face amount, to 100.41. The yield dropped to 1.69 percent on Aug. 21, the lowest since April.
The 10-year U.S. Treasury yield climbed five basis points Wednesday to 2.12 percent.
The pound fell versus all of its 16 major peers tracked by Bloomberg except Norway’s krone. It erased an earlier gain versus the euro after New York Federal Reserve President William Dudley said global stock-market turmoil had reduced the case for the U.S. to raise interest rates in September.