Should gilts really be yielding less than US treasuries?

Last week the yield on UK gilts dropped below US treasuries as the Bank of England's quantitative easing programme continued to impact the market.

Ahead of further falls for both gilts and treasuries this week, gilt yields dropped to 1.47% on the benchmark 10-year note during trading last week, below US treasuries which were at 1.48%. A number of fund managers – including James Foster at Artemis and Robin Hepworth at Ecclesiastical – said this situation is not only unrealistic because of QE, but also unsustainable. Consequently, some have been selling out of gilts following the falls to fresh lows. Foster, running Artemis’ £543m Strategic Bond fund, said: “My fear for the UK is that you are getting all these extreme measures – a...