a strong sign of whats to come.....

Gilts Slump as Demand at U.K. 40-Year Bond Auction Falls



By Kim-Mai Cutler

March 25 (Bloomberg) -- U.K. government bonds slumped, extending three days of losses, after an auction of 40-year gilts failed to meet the amount of debt the Treasury offered.

Investors bid for 1.63 billion pounds ($2.4 billion) of notes, lower than the 1.75 billion pounds of 4.25 percent notes the Treasury had slated to sell, the U.K. Debt Management Office said today.

“Basically it’s the first failed auction,” said John Wraith, head of sterling interest-rate strategy at RBC Capital Markets in London. “They didn’t receive enough to cover it all so the market’s obviously sold off extremely heavily.”

U.K. bonds fell, pushing the yield on the 10-year gilt 10 basis points higher to 3.43 percent by 11:02 a.m. in London. The 4.5 percent security due March 2019 slipped 0.82, or 8.2 pounds per 1,000-pound face amount, to 109.04.

The yield on the two-year note rose three basis points to 1.29 percent. Yields move inversely to bond prices.