Bonds: Gilts edge higher amid stimulus

Gilts retreated slightly at the start of the week, but not before an initial surge that sent their yields to fresh record-lows on an intraday basis at 0.71%.

The yield on the benchmark 10-year Gilt finished two basis points higher on Monday at 0.76%.

Sterling assets were generally buoyant after news broke that Theresa May would become the next Prime Minister, as of Wednesday, hopefully eliminating at least part of the recent policy vacuum in Westminster.

Acting as a backdrop, economists were anticipating that the BoE would cut Bank Rate by 25 basis points to 0.25% when it met on the following Thursday.

To take note of as well, Japanese prime minister Shinzo Abe announced his intention to implement a large package of fiscal stimulus following his clear election victory.

Earlier in the day speculation had surfaced that the BoJ might also be preparing its own stimulus measures.

That came close on the heels of a considerably stronger than expected reading on the US jobs market on 8 July, although the latest wage numbers came in on the weak side.

Japanese 10-year bonds edged lower, nudging yields up by one basis point to -0.27%. Similarly-dated German bund yields rose by two basis points to -0.17%.

Ten year US Treasury yields ended the day significantly higher, rising by seven basis points to 1.43%.