Bond heavyweights short gilts amid warnings of ‘explosion' in yields

Bond heavyweights have begun shorting UK gilts ahead of an expected correction, warning yields have reached ‘extreme' lows.

Earlier this month borrowing costs in Britain tumbled to the lowest level for more than 300 years, with the yield on 10-year gilts hitting a record low of 1.919%. The yield has since moved up marginally to hover around the 2% mark, but it remains down 150 basis points from the end of 2010. An increasing number of bond managers expect the rush by investors to the safe haven asset class to reverse  if the economic outlook continues to improve, and have started to short a variety of gilts. M&G’s bond fund star Richard Woolnough and Thames River bond duo Peter Geikie-Cobb and Paul Thur...