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Gilts Drop Most Since March 2020 as Traders Weigh Supply Surge

  • Bank of England to start selling gilts accumulated under QE
  • UK DMO is set to update its plan for gilt sales Friday
A worker stands outside the Bank of England headquarters in London.

A worker stands outside the Bank of England headquarters in London.

Photographer: Hollie Adams/Bloomberg

UK borrowing costs surged the most since March 2020 after the Bank of England’s rate decision, as traders grappled with the prospect of a wave of gilt supply both from the central bank’s active sales and to fund the government’s fiscal plans.

Yields on 10-year bonds surged as much as 22 basis points to 3.53%. Longer-dated bonds also fell, with 30-year yields hitting the highest level since 2011 at 3.81%. The BOE raised its key rate to 2.25% and voted to start selling the gilts it had accumulated under quantitative easing at a pace of 10 billion pounds ($11.2 billion) per quarter from Oct. 3.