10-year Gilt Yield Drifts To New Lows As BOE Outlines Bond-buying Shortfall

By Carla MozeeMarketsMarketWatch Pulse

The yield on the U.K.'s 10-year bond fell to new record lows Wednesday, a day after the Bank of England ran into a shortfall in buying debt under its expanded bond-buying program. The yield on the 10-year bond, or gilt , shed 3 basis points to 0.53%. The BOE said Tuesday it could only buy �1.12 billion ($1.46 billion) in longer-dated government debt, below its �1.17 billion target. It was the second day of the BOE's expanded purchase plan. The BOE said Wednesday it plans to make up the shortfall in the second half of its six-month bond-purchase program. "The extent of the demand for U.K. government bonds is evident from the refusal of institutions to sell enough to the Bank of England to meet its asset purchase target," said Jasper Lawler, market analyst at CMC Markets, in a note. Analysts have said institutions such as pension funds and insurers want to hold onto their long-dated bonds as they need the income to meet longer-term liabilities.

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