U.K. 10-Year Yields Below 1% as Brexit Spurs Bets on BOE Action
- Futures traders boost odds of July rate-cut to more than 50%
- U.K. 30-year yields also slide to record on demand for safety
Could U.K. 10-Year Yields Turn Negative?
U.K. government bonds surged, pushing 10-year yields below 1 percent for the first time, amid speculation the nation’s exit from the European Union will push the Bank of England to cut interest rates to a record low as soon as next month.
Demand for U.K. bonds was bolstered as the turmoil infecting global markets since the vote spread, boosting demand for fixed-income assets as a haven. Thirty-year yields also slid to a record as futures implied a more than 50 percent chance of a BOE interest-rate cut in July, from just 16 percent a week ago. With Britain’s two major parties in turmoil, investors are struggling to assess the outlook for the economy, with politicians no closer to clarifying just what the U.K’s new relationship with the EU will look like.