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Gilt yields reach a high as Federal Reserve discounts another round of QE
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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:  
2.72%  
gilt yields down   0.13%
 
gilt yields down   0.26%
 
gilt yields down   0.19%
 
gilt yields down   1.43%
 
15-year gilt yields 2012
Fig 1: 15-year gilt yields chart showing rates to March 2012

 

March gilt yields up 13 basis points to 2.72%

Find out more: latest gilt yields

The
15-year gilt yields continue to rise this month and given a significant boost after the Federal Reserve discounted the need for Quantitative Easing 3 as the US economy produces some positive results for the year. Investors moved funds out of US treasury bonds and UK government gilts as the expectation of deflation in economies is unlikely. Over a four day period yields increased by 37 basis points which is a significant movement to the potential benefit of pensioners as this would eventually increase annuities and therefore pension income.

For March yields increased 36 basis points and this represents the range of change for the month starting at 2.59% to 2.95%. 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 - March 2012
      Thurs 1st Fri 2nd
     
2.67%
gilt yields up   0.08
2.60%
gilt yields down   0.07
Mon 5th Tues 6th Wed 7th Thurs 8th Fri 9th
2.62%
gilt yields up   0.02
2.59%
gilt yields down   0.03
2.60%
gilt yields up   0.01
2.63%
gilt yields up   0.03
2.64%
gilt yields up   0.01
Mon 12th Tues 13th Wed 14th Thus 15th Fri 16th
2.58%
gilt yields down   0.06
2.66%
gilt yields up   0.08
2.83%
gilt yields up   0.17
2.88%
gilt yields up   0.05
2.95%
gilt yields up   0.07
Mon 19th Tues 20th Wed 21st Thurs 22nd Fri 23rd
2.92%
gilt yields down   0.03
2.93%
gilt yields up   0.01
2.87%
gilt yields down   0.06
2.83%
gilt yields down   0.04
2.79%
gilt yields down   0.04
Mon 26th Tues 27th Wed 28th Thurs 29th Fri 30th
2.83%
gilt yields up   0.04
2.77%
gilt yields down   0.06
2.73%
gilt yields down   0.04
2.72%
gilt yields down   0.01
2.72%
gilt yields no change
  Fig 2: Daily 15-year gilt yields and changes


Gilt yields reached a low of 2.43% by the end of January 2012 and increased to 2.95% by the middle of March or a difference 52 basis points. Since this time the yields have reduced and the final close of 2.72% as fears surfaced regarding the economies of the Eurozone, China and US. As a result investors have moved funds back to the safety of government bonds and gilts pushing the price higher and thereby reducing the yields.

As a general rule a 13 basis point change in the gilt yields would result in a 1.3% change in annuity rates for the month. Since the end of January gilt yields have increased 29 basis points and this would means annuity rates should increase 2.9% although providers will often delay increasing rates incase they fall later. Providers may also have other strategies for market share so there may be delays in the changes made to annuities. See Annuity Rates 2012 for the latest updates.

Despite the increase in yields annuity rates have remained below expected levels at at the end of March we can expect standard annuities to increase by0.95%, smoker annuities by 2.27% and impaired annuity rates by 0.3%.

 
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