Bonds: MPC's Weale spurs selling in Gilts
Longer-dated Gilts broke ranks with their peers from the US following hawkish rhetoric from one of the Bank of England's top policymakers.
In an interview with the Financial Times the Monetary Policy Committee’s Martin Weale said strong data on wages meant the monetary authority should be ready to act in august of 2015, far sooner than financial markets were factoring in.
That saw the yield on 10-year Gilts edge higher by two basis points to 2.13%, while the yield on US Treasury notes of a similar maturity declined one basis point to 2.40%.
Weale’s remarks may also have bumped Sterling higher.
The yield on two-year Gilts advanced by three basis points to 0.65% after hitting an intra-day high of 0.67% - the highest since September 2014.
Acting as a backdrop, negotiations between Greece and its creditors continued to try the patience of market participants.
On Wednesday afternoon Greek prime minister Alexis Tsipras resorted to social media to criticise lenders for not accepting the modified proposals presented by Athens.
“The repeated rejection of equivalent measures by certain institutions never occurred before – neither in Ireland nor Portugal,” he said.
“This odd stance seems to indicate that either there is no interest in an agreement or that special interests are being backed,” Tsipras added.
Nonetheless, the immediate reaction in 10-year Greek government bond yields was muted. They rose by 12 basis points to 10.69%.
German bund yields at the same tenor retreated by two basis points to 0.86% on a slight haven bid.
The Greek leader was due to meet again later in the day with the heads of the ECB, IMF and European Commission.
In another corner of the fixed-income space, US billionaire investor Carl Icahn took warned on Twitter that markets are “extremely overheated”, especially those in US speculative-grade corporate bonds.
“If more respected investors had warned about the market in ’07, we might have avoided the crisis in ’08,” Icahn remarked.
That echoed recent warnings from various traders and analysts that so-called junk bonds could be the most susceptible to heightened volatility as the Fed moves to raise its main policy rate.