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UK government bonds go negative for first time

​Negative yields have hit the UK gilt curve for the first time ever today following lower-than-expected appetite for the Bank of England’s gilt buybacks.

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Aug 10, 2016
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Negative yields have hit the UK gilt curve for the first time ever today following lower-than-expected appetite for the Bank of England’s gilt buybacks.

The yield on the 4.75 per cent March 2020 gilt dropped to -0.012 per cent just after 8am on Wednesday morning, along with the 3.75 per cent September 2019 gilt. The 4.5 per cent March 2019 gilt dropped to -0.010 per cent.

In April, MPC member Gertjan Vlieghe said that theoretically rates could go a “little bit negative”.

Outside the UK, the entire stock of Swiss government bonds turned negative on 1 July, just one week after Brexit, when yields on the Swiss 2064 dropped below zero.

In July, the German government issued its first 10-year bonds at auction with negative yields as investors choose safety over return on capital.

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