Economic data boosts gilts

Date: Tuesday 09 Mar 2010

Gilts were in demand as less than cheerful economic data had investors seeking the safety of government debt.

An increase in Britain’s trade deficit in January surprised the market Tuesday.

Data from the Office for National Statistics showed the UK’s deficit on trade in goods widened to £7.99bn from £7.01bn the previous month, about £1bn more than economists had predicted.

Meanwhile, house prices are falling in the North and the pace of growth elsewhere is slowing, according to the latest research from the Royal Institute of Chartered Surveyors (RICS). The balance of estate agents reporting a rise in house prices rather than a fall dropped to 17% in February from 31% the month before. That's the biggest one-month fall since April 2008.

The yield on a 10-year gilt fell by five basis points to 4.05%.

There was little in the way of economic news to move bonds across the Channel and the Atlantic.

Mainland European bonds were also lower with the yield on Germany’s benchmark 10-year bund falling by three basis points to 3.13%.

The 10-year US treasury yield fell by one basis point to 3.7%.

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