A sell-off in European fixed income had a negative impact on UK gilts, with short sterling taking a battering that erased Tuesday’s gains.
Traders look their lead from Europe, with gilts tracking losses in Euribor. UK government bond prices sank across the curve, but managed to outperform bunds.
Yields on ten-year gilts rose to their highest levels since May while December long gilt futures shed a third of a point and short sterling interest rate futures were down by a huge six ticks.
Yields on the benchmark ten-year bund hit a seven-month high as a weak euro, strong German data and anti-inflation comments from European Central Bank officials triggered selling. The negative sentiment spilt over into the UK market, although selling was less extreme.
The December long gilt eased by 29p to £11.52. Treasury 4¾p per cent 2010 eased by 15p to £101.27 while Treasury 6 per cent 2028 was down by 51p at £124.17.