UK two-year gilt yields fall to five-month low as markets eye 2024 rate cuts

LONDON, Nov 7 (Reuters) – British two-year government bond yields fell to their lowest in nearly five months on Tuesday, after Bank of England chief economist Huw Pill discussed the possibility of interest rate cuts late on Monday.

Two-year gilt yields GB2YT=RR, which reflect interest rate expectations, dropped more than 9 basis points on the day to 4.628%, their lowest since June 12 according to LSEG data.

Two-year gilts’ yield premium over equivalent German government bonds DE2GB2=TWEB fell to its smallest since Sept. 27, according to TradeWeb figures.

Interest rate futures fully price in a quarter-point interest rate cut by the BoE by August 2024, and have a greater than 50% chance of a cut priced in for June 2024.

Pill said on Monday that rate futures pricing in a cut for August 2024 “doesn’t seem totally unreasonable, at least to me.”

(Reporting by David Milliken;
Editing by Andrew Cawthorne)

((david.milliken@thomsonreuters.com; +44 20 7513 4034;))