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31 July 2012 last updated
Gilt Yields - July 2012 review
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15-Year Gilt Yields over 24 months
Latest yield:   1 month change:   3 month change:   6 month change:   1 year change:  
2.04%  
gilt yields down   0.17%
 
gilt yields down   0.63%
 
gilt yields down   0.39%
 
gilt yields down   1.52%
 
15-year gilt yields 2012
Fig 1: 15-year gilt yields chart showing rates to July 2012

 

Fear over Spain's debt and Quantitative Easing push gilt yields to lowest levels

Find out more: annuity rates for July

The 15-year gilt yields reached a new low during the month of July of 2.03% before settling 25 basis points lower to end at 2.04%.

Although investors were initially optimistic with the Eurozone bailout package for Spain's banks, fear grew over Spain's sovereign debt and their 10-year bond yields increased to 7.66%, well above the 7% level that would trigger a bailout for the country as in the case of Portugal, Greece and Ireland.

In addition the Bank of England announced another £50 billion of Quantitative easing (QE) bring the total so far injected into the economy to £325 billion. This injection was due to the slowdown in the economy and reducing inflation nearing the Bank of England's target of 2%. The combined effect of both the Eurozone debt crisis and QE was to force the yields on gilts lower and so far this has not been fully reflected in annuity rates.

For July the yields range for the month was from 2.29% to 2.03% or 25 basis points which is similar to the previous month. 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 - July 2012
Mon 2nd Tues 3rd Wed 4th Thurs 5th Fri 6th
2.24%
gilt yields down   0.05
2.31%
gilt yields up   0.07
2.28%
gilt yields down   0.03
2.23%
gilt yields down   0.05
2.18%
gilt yields down   0.05
Mon 9th Tues 10th Wed 11th Thurs 12th Fri 13th
2.16%
gilt yields down   0.02
2.16%
gilt yields no change
2.13%
gilt yields down   0.03
2.10%
gilt yields down   0.03
2.10%
gilt yields no change
Mon 16th Tues 17th Wed 18th Thus 19th Fri 20th
2.06%
gilt yields down   0.04
2.06%
gilt yields no change
2.03%
gilt yields down   0.03
2.09%
gilt yields up   0.06
2.05%
gilt yields down   0.04
Mon 23rd Tues 24th Wed 25th Thurs 26th Fri 27th
2.05%
gilt yields no change
2.04%
gilt yields down   0.01
2.04%
gilt yields no change
2.06%
gilt yields up   0.02
2.11%
gilt yields up   0.05
Mon 30th Tues 31st      
2.12%
gilt yields up   0.01
2.04%
gilt yields down   0.08
     
  Fig 2: Daily 15-year gilt yields and changes


Annuity rates have reduced across the board in July with standard, smoker and impaired annuities reducing. So far standard annuity rates are lower by 1.31% and smoker rates by 1.73%. With yields down 25 basis points it would suggest that annuities will reduce by 2.5% so there is still scope for further reduction. See Annuity Rates 2012 for the latest updates.
 
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