Investors pile into inflation-linked gilts at auction

Investors flocked to buy index-linked gilts in a Debt Management Office(DMO) auction yesterday, despite real yields being the lowest since the bonds were first offered in the early 1980s.

The DMO sold £1.6bn of index-linked gilts maturing in 2024, at a real yield of -1.26%. Investors bid for 1.86 times the securities allotted as inflation concerns grow. Strategists argued the record low yield reflected strong demand, after the Treasury's decision last month to loosen the Bank of England's remit. This would make it easier for the Bank to tolerate going over its 2% inflation target, the Times reports. Some analysts also suggested investors may be positioning themselves for a "wall of money" from Japan after the country's central bank said it would buy $600bn (£390bn) of ...