Foreign investors moved out of U.K. government bonds in October at the fastest pace in eight months, data from the Bank of England revealed Friday.
The figures show that foreign investors sold 5.2 billion pounds ($6.7 billion) of U.K. gilts in the month, which was due to culminate with Britain leaving the European Union on Oct. 31. Prime Minister Boris Johnson managed to reach terms on a divorce deal, causing gilt yields to rise, only to accept another extension of the deadline. The month ended with a cross-party agreement to hold the Dec. 12 election. The move out of gilts was the biggest since February.
“I can understand why, with an election coming up, that only those who are very confident with political knowledge are investing,” said Peter Chatwell, head of fixed income strategy at Mizuho International Plc. “Foreign investment in gilts will probably firm up once the currency has stabilized after the general election.”
U.K. government bonds slumped in October, with yields gaining 14 basis points as the risk of a no-deal Brexit receded. The securities have continued to slide this month, with yields up four basis points on the month at 0.67%.
To contact the reporter on this story: Charlotte Ryan in London at cryan147@bloomberg.net
To contact the editors responsible for this story: Dana El Baltaji at delbaltaji@bloomberg.net, Michael Hunter, William Shaw
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