gilts

Fears over the end of QE in the US and stronger data from the eurozone caused UK and US government bond yields to jump on Monday, surprising investors.

London's leading share index fell quickly into the red after new Bank of England (BoE) governor Mark Carney unveiled plans to issue market's forward guidance on interest rates.

Sterling and gilt yields have jumped this morning after the latest Monetary Policy Committee minutes revealed Mark Carney and all other MPC members voted against more QE in July.

The Financial Conduct Authority (FCA) is looking into claims traders intentionally pushed up the price of government bonds before attempting to sell them to the Bank of England (BoE) in 2011.

Over the past month losses have racked up across bond sectors after comments from the Federal Reserve signalling the end of quantitative easing spooked global markets.

The FTSE 100 dropped sharply on Thursday morning following the wider market sell-off, while gilt yields spiked to their high level in over a year, after Fed chairman Ben Bernanke said QE would be slowed later this year.

More than half of advisers believe pensions invested in lifestyle funds are riskier than they were twelve months ago, as a result of speculation about a bubble in the bond market.

Investors flocked to buy index-linked gilts in a Debt Management Office(DMO) auction yesterday, despite real yields being the lowest since the bonds were first offered in the early 1980s.

James Burns, head of the multi-manager desk at Smith & Williamson, said he sees investment opportunities in Europe, Japan and the United States (US).

Investors who go it alone will have to dedicate ten hours a week to managing their portfolio in order to beat inflation, according to one external asset manager.