Gilts in spotlight after week of debt market turmoil

Leading fund managers believe gilts now look like the next safe haven bond market to come under threat ahead of DMO sale this week.

Fund managers have warned investors that gilts no longer represent a safe haven, ahead of a crucial UK debt auction. Following a week of turmoil in bond markets, during which yields on 10-year bunds spiked above gilts for the first time in years after a disastrous debt auction, the sale of a tranche of 10-year gilts has gained new significance. The bid-to-cover level for the German auction was just 1.07 times, with the government only able to sell €3.644bn ($4.92bn) of the €6bn worth of 10-year bunds on offer. In last week’s Investment Week, managers had already warned bunds looked...