Gilt yields to hit 2.5% by mid year says Capital Economics

UK gilt yields will hit 2.5% this year, driven by bank demand, as well as the Bank of England's buyba...

UK gilt yields will hit 2.5% this year, driven by bank demand, as well as the Bank of England's buybacks, according to Capital Economics. A note from the consultants cites central bank figures claiming net dealing in gilts by UK banks was £25bn at the end of February, compared to -£10bn last August. It claims banks are attracted by the asset's zero risk rating and shrinking demand for loans from the private sector. Capital Economics says: "The bottom line is that quantitative easing and banks' purchases of government debt should help to fuel a further rally in gilts. "Alongside...