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Gilt yields increase as investor confidence returns to equity markets
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15-Year Gilt Yields over 1 year
Latest yield:   1 month change:   3 month change:   6 month change:   1 year change:  
2.59%  
gilt yields down   0.16%
 
gilt yields down   0.11%
 
gilt yields down   0.75%
 
gilt yields down   1.56%
 
15-year gilt yields 2012
Fig 1: 15-year gilt yields chart showing rates to February 2012

 

February yields improve 16 basis points to 2.59%

Find out more: latest gilt yields

This month has seen strong gains in equities with the FTSE-100 index reaching a high of 5,945 as well as increasing 15-year gilt yields rising to 2.77% before falling back to 2.59%. The reason for the increase is likely due to investors moving funds from UK government bonds and gilts to equities or even the higher yielding European sovereign debt, now that Greece has finally agreed their rescue plan. The Eurozone problem has not gone away so there may be further volatility in the future that will affect gilt yields.

For February yield volatility was a range of 2.43% to 2.77% or a change of 34 basis points. Fig 2 below shows the daily 15-year gilt yields and the increase or decrease from the previous day's close:


15-Year Gilt Yields - February 2012
    Wed 1st Thurs 2nd Fri 3rd
   
2.50%
gilt yields up   0.07
2.57%
gilt yields up   0.07
2.66%
gilt yields up   0.09
Mon 6th Tues 7th Wed 8th Thurs 9th Fri 10th
2.70%
gilt yields up   0.04
2.68%
gilt yields down   0.02
2.76%
gilt yields up   0.08
2.76%
gilt yields no change
2.67%
gilt yields down   0.09
Mon 13th Tues 14th Wed 15th Thus 16th Fri 17th
2.66%
gilt yields down   0.01
2.62%
gilt yields down   0.04
2.60%
gilt yields down   0.02
2.66%
gilt yields up   0.06
2.72%
gilt yields up   0.06
Mon 20th Tues 21st Wed 22nd Thurs 23rd Fri 24th
2.77%
gilt yields up   0.05
2.74%
gilt yields down   0.03
2.67%
gilt yields down   0.07
2.63%
gilt yields down   0.04
2.60%
gilt yields down   0.03
Mon 27th Tues 28th Wed 29th    
2.54%
gilt yields down   0.06
2.53%
gilt yields down   0.01
2.59%
gilt yields up   0.06
   
  Fig 2: Daily 15-year gilt yields and changes


Fig 2 above shows the 15-year gilt yields started February 2012 at 2.43% which is a reduction of 3 basis point during January. By 3rd February they had increased 23 basis points and this almost offsets the 27 basis points decrease in gilt yields over the past two months. See Annuity Rates 2012 for the latest updates.

As a rough guide a 16 basis point change in the gilt yields would result in a 1.6% change in annuity rates for the month. In the short term standard annuity rates have been relatively high and we would expect these to decrease by 2.4% if gilt yields do not improve.

 
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