The UK has sold bonds with a negative yield for the first time as a drop in inflation has highlighted how the Bank of England may need to take further steps to revive price growth back to its 2 per cent target. The country sold £3.8bn of three-year gilts at a yield of minus 0.003 per cent, according to the Debt Management Office. The slightly negative yield suggests investors who hold the debt to maturity will get back less than they paid – when accounting for regular interest payments and the return of principal. The UK had sold a one-month bill at a negative yield in 2016 but this is the first time it has sold a conventional longer term bond at yield below zero. Data released yesterday showed annual UK consumer price inflation nearly halved to 0.8 per cent last month – the lowest level in almost four years.
SOURCE: MONEYFACTS – [ – 21.5.20.]