The UK’s 10-year bond yield fell below 1% for the first time in history on Monday.
At around 9:20 a.m. BST (4:20 a.m. ET) the yield on the UK’s benchmark government bond fell below 1%, dropping as low as 0.938% at around 10:00 a.m.
That marked the first ever time the 10-year yield on one of Europe’s biggest sovereign debt vehicles has dropped below 1%. It is part of a historical rally in the price of bonds as investors worldwide flee from risk and into the safety of government debt, which has been exacerbated massively by the UK’s vote for Brexit on Thursday.
Since 10:00 it has rallied a small amount, and is currently trading at 0.948%. Bond yields move inversely to the price of the bond on the market. The more people want the bond, the higher the prices go, and the lower the yield.
Here is how the 10-year Gilt looks at lunchtime on Monday:
Despite warnings from every major ratings agency that the UK faces a credit downgrade in the near future thanks to Brexit, UK government bonds — known as Gilts — are still attracting money as a relative safe have from the chaos hitting the equity and currency markets right now.
Lowering yields reflect the belief of investors that the Bank of England may be forced to cut interest rates at their next meeting given the gloom surrounding the economy, which several banks are now predicting could fall into recession in the coming months and years.
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