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Gilt yields end month with an time low as Eurozone crisis develops
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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:  
2.43%  
gilt yields down   0.03%
 
gilt yields down   0.47%
 
gilt yields down   1.13%
 
gilt yields down   1.78%
 
15-year gilt yields - January 2012
Fig 1: 15-year gilt yields chart showing rates to January 2012

 

January gilt yields down 3 basis points to 2.43%

Find out more: latest gilt yields

The Eurozone continues to concern the markets with the debt crisis still unresolved and developing. The International Monetary Fund (IMF) is attempting to create a $1tn fund to protect against sovereign debt defaults although there is uncertainty over Greece which is still negotiating with their creditors over their debt.

For January the range of yields for the month starting at 2.46% to 2.63% or a difference of 17 basis points. This month was not volatile compared to previous months as equity markets have shown some potential for increases having increased by 110 points to end at 5,682 based on better than expected economic data, off-setting uncertainty from the Eurozone. As a result gilt yields were down slightly by 3 basis points to end at an all time record for the end of a month of 2.43%.
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 - January 2012
Mon 2nd Tues 3rd Wed 4th Thurs 5th Fri 6th
 
2.51%
gilt yields up   0.05
2.52%
gilt yields up   0.01
2.51%
gilt yields down   0.01
2.48%
gilt yields down   0.03
Mon 9th Tues 10th Wed 11th Thurs 12th Fri 13th
2.46%
gilt yields down   0.02
2.52%
gilt yields up   0.06
2.46%
gilt yields down   0.06
2.48%
gilt yields up   0.02
2.42%
gilt yields down   0.06
Mon 16th Tues 17th Wed 18th Thus 19th Fri 20th
2.42%
gilt yields no change
2.41%
gilt yields down   0.01
2.40%
gilt yields down   0.01
2.50%
gilt yields up   0.10
2.56%
gilt yields up   0.06
Mon 23rd Tues 24th Wed 25th Thurs 26th Fri 27th
2.63%
gilt yields up   0.06
2.63%
gilt yields no change
2.61%
gilt yields down   0.02
2.55%
gilt yields down   0.06
2.53%
gilt yields down   0.02
Mon 30th Tues 31st      
2.46%
gilt yields down   0.07
2.43%
gilt yields down   0.03
     
  Fig 2: Daily 15-year gilt yields and changes

Fig 2 above shows gilt yields started January 2012 at 2.46% which is a reduction of 24 basis point from the start of December. This should translate to roughly a 2.4% reduction in annuity rates and providers have not followed the gilt yields by the start of January suggesting decreases in annuity rates can be expected. However, yields did increase to 2.63% towards the end of the month although this did not prevent annuities reducing.

Pension annuity rates are expected to fall with The Bank of England plan for £75 billion of Quantitative Easing to start in February 2012 and this is likely to force gilt yields lower and annuity rates will also reduce towards the end of February and into March 2012.
 
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