UK gilt yields slide to six-week low on Korean nuclear fears
LONDON, Aug 9 (Reuters) - British government bond yields
slid to their lowest in six weeks in a thin market on Wednesday
as investors piled into safe assets such as gilts and German
Bunds as the United States and North Korea stepped up their
rhetoric.
U.S. President Donald Trump said late on Tuesday that North
Korea would face "fire and fury like the world has never seen",
and a spokesman for the Korean People's Army said on Wednesday
it was "carefully examining" plans for a missile attack on the
U.S. Pacific territory of Guam.
Ten-year gilt yields sank 6 basis points on the
day to touch their lowest since June 27 at 1.097 percent, while
five-year yields dropped 5 basis points to 0.48
percent, their lowest since June 22.
"There has definitely been an element of flight to safety.
But I think one has to put this all in a bit of perspective,"
said Marc Ostwald, a fixed income strategist at brokers ADM
Investor Services.
"A lot of the movements are exaggerated by thin summer
trading conditions. The fear factor because of Trump's rhetoric
is understandable. But we've been through these bouts with North
Korea before," he added.
Strong gains in prices of long-dated gilts suggested market
fears were less marked than if only shorter-dated bonds had
rallied, Ostwald said.
German and U.S. debt also performed strongly, with 10-year
Bund yields also dropping by 5 basis points.
Sept long gilt future 127.38 (+0.49)
Dec (Shanghai: 600875.SS - news) 2017 short sterling 99.63 (unch.)
March 2018 short sterling 99.57 (unch.)
10-year gilt yield 1.11 pct (-5 bps)
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(Reporting by David Milliken; Editing by Richard Balmforth)