This one’s dedicated to George.
We aren’t absolutely sure, but it looks like the 10-year gilt on Tuesday plunged to a 50-year low — well below March 2009 levels, anyway:
We blame Dr Martin Weale. As he warned in The Times on Tuesday:
Britain faces a “significant” risk of a renewed slide into recession, a leading policymaker at the Bank of England warned yesterday.
It would be “foolish” to rule out the possibility of a double-dip downturn, even if it was not the Bank’s central prediction, said Dr Martin Weale, the newest member of the Monetary Policy Committee (MPC). He also feared that the Bank’s central outlook — which is for growth of about 2.8 per cent in 2011 and 3.2 per cent in 2012 — could be too optimistic…
Dr Weale said that the Bank’s latest economic forecasts, published on August 11, had a 10 per cent outside chance of four-quarter long economic contractions in 2011 and 2013. “The forecast is putting a significant chance on the economy contracting over a four-quarter period,” said Dr Weale.
Cheery stuff from the new boy.
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With the 10-year bund yield flying through record lows like there’s no tomorrow, how low do UK government bond yields need to go before records start getting broken here as well?
First, they’d need to punch through the 2.5 per cent yield recorded in December 1946, according to data provided by Barclays Capital to the FT’s James Mackintosh on Tuesday.
And then after that…
As far as we can tell — 1897 is the low-point. That’s going back to when consols reigned in the UK debt market. According to William Bernstein:
In 1897 the consol yield hit a low of 2.21%, which has not been seen since. This identifies the high-water mark of the British Empire as well as any political or military event.
Blimey.
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Update: Speaking of consols — the FT’s James Mackintosh sends this chart from Global Financial Data along, showing yields stretching all the way back to 1729 (click to enlarge):
Related links:
RBS go low, see 10-year bund yields at 1% – FT Alphaville
Survivor’s gilt – FT Alphaville