Gilt yields fall to record low as investors flock to safe havens

Japanese equities plunge 5%

The yield on benchmark 10-year UK government bonds fell to its lowest since 1989 yesterday, as fears grew that policymakers do not have the firepower left to kick-start global economic recovery.

The 10-year gilt yield dropped 14 basis points, or 0.14 percentage points, to 1.28% by late afternoon yesterday, after hitting 1.226% – the lowest since Bloomberg began collecting data in 1989. According to Bloomberg World Bond Indexes, gilts have returned 5% this year, the most among developed sovereign markets. Investors have been flocking to perceived safe haven assets as interest rates fall into negative territory across the globe, testing their faith that central bankers have the tools left to make meaningful policy decisions.   This has had serious repercussions for Japan, wi...