UK gilt prices rocket after Bank of England steps into market

By Andy Bruce and William Schomberg

LONDON (Reuters) -British government bond prices soared on Wednesday after the Bank of England not only shelved plans to sell its stock of gilts for the time being, but said it would begin buying long-dated bonds in an effort to calm the market.

Twenty- and 30-year gilt yields dropped around 50 basis points on the day after they rose above 5% in early trading – the highest level for 30-year yields since 2002.

Ahead of the BoE’s decision, strategists said the market was characterised by very poor liquidity and pricing quality – a clear sign of market dysfunction.

The 30-year benchmark gilt yield was trading at 4.53%, down 47 basis points on the day, at 1056 GMT.

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