The yield fell 8 basis points to 2.89pc after a weak US jobs survey boosted speculation that central banks worldwide could provide a second wave of monetary stimulus.
The ADP Employer Services report showed the US economy unexpectedly shed 39,000 private sector jobs in September, confounding expectations for an increase.
The figures had a particular resonance because they came two days before the US government’s official monthly employment release and after top Charles Evans, a top US Federal Reserve official, was quoted in the Wall Street Journal as saying the US central bank should do “much more” monetary easing.
“We’re seeing a continuation of the bullish theme that is being driven by real money investors,” said Matteo Regesta, rates strategist at BNP Paribas.
Mr Regesta said gilts were benefiting not just from growing expectations of more quantitative easing in the United States but also from anticipation Britain’s government would maintain its tough deficit-cutting line in its Comprehensive Spending Review on October 20.
“The government is under a lot of pressure to deliver on fiscal tightening,” he said. “That, combined with a weak recovery, is providing support to gilts.”
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