Gilt yields hit lowest level ever

Gilt yields have fallen to another record low as investors' appetite for UK debt remains strong amid eurozone woes.

During trading yesterday, yields on the benchmark 10-year gilt touched a new low of 1.92%, according to Tradeweb.

It beat the previous all-time low of 1.922% seen at the end of last year, and is the lowest level since Bank of England records started in 1703.

The Debt Management Office confirmed it was the lowest ever yield seen on a UK 10-year gilt.

The fall came days after France and Austria lost their AAA-ratings from Standard & Poor's, and continues the flight to quality seen in recent months.

Gilt yields have plunged as the eurozone crisis has worsened, with the yield on the benchmark 10-year gilt falling more than a third in the last six months. It stood at 3% back in July last year.

This trend has continued into 2012, with gilts starting the year with a yield of 2.02%.

Many investors have warned against snapping up gilts now, with duration in the longer-dated gilt market around 18 years.

With duration so high, a small move up in yields could have severe consequences for investors, but for now they continue to back the asset over most other sovereigns around the world.

Today gilt yields were back above 2%, at 2.01% by early afternoon.