A sell-off in the British government bond market continued on Monday amid political instability jitters, pushing 10-year gilt yields to their highest since June’s Brexit vote and further pressuring the battered pound. That, plus foreign investor demand for an extra premium for buying gilts, was driving up yields, analysts said. Most of the increase this month reflects expectations of higher inflation, with conventional bond yields rising fast, but inflation-protected bonds less so. Gilt yields have increased despite the Bank of England purchasing bonds worth about £14bn a month. Inflation is expected to rise above 2% in 2017 because of the sharp fall in the value of the pound.

Source: The Guardian October 17, 2016 18:45 UTC