Fears of Global Recession Hit Bond Market


British 30-year government bond yields fell below 1% for the first time on record yesterday after investors flocked into safe fixed-income assets on growing fears of a global recession. Yields on 30-year gilts hit a low of 0.988% yesterday. Lower bond yields reduce the cost of new government borrowing, but also act as a signal that financial markets expect slower growth and cuts in Bank of England interest rates.

Markets are also betting that the Bank of England will be forced to cut interest rates before the end of the year if Britain leaves the European Union on Oct. 31 without a transition deal to reduce economic disruption.

British retail sales unexpectedly edged up in July, helped by the strongest growth in online spending in three years. Monthly retail sales volumes rose 0.2% after a 0.9% surge in June, the Office for National Statistics said on Thursday, beating the average forecast of a 0.2% decline.

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14:00 – GBP: Michigan Consumer Sentiment Index (Aug) expected to be lower at expected to be lower