UK Gilt yields hit 4% again

LONDON (ShareCast) - Yesterday's decision by the Bank of England to extend quantitative easing hit gilt futures prices, driving 10 year futures yields back to the 4% area again, for the first time since July. Since early March when gilt yields were down near 3% the gilt market has drifted lower pushing yields to peaks of over 4% in June.

10 year Gilt Yield Futures Since those June peaks, yields have traded steadily lower until yesterday, when the additional quantitative easing sent gilt prices lower and yields higher. Until yesterday, the yield had been trading steadily lower in a downward channel; however yesterdays move sent it spiking upward through its 5 month resistance line at 3.8500. A weekly close above this key resistance level increases the potential for a move back towards the highs for the year.