UK’s five-year bond sale saw the weakest demand since 2022

The UK’s Debt Management Office (DMO) only managed to sell £4.75 billion in five-year government debt on Wednesday, but the demand came in at the weakest level since late 2022, according to data from ￰0￱ auction got a cover ratio of 2.80, which means buyers only placed bids worth 2.8 times the amount on ￰1￱ issue matures in 2030 and comes amid growing investor concerns about the UK government’s worsening fiscal ￰2￱ poor showing followed an even weaker performance on Tuesday, when a 30-year gilt sale drew the lowest interest seen in more than two ￰3￱ events suggest investors are starting to back off despite yields surging to multi-decade ￰4￱ Treasury is trying to raise cash to fill a large budget gap ahead of a November fiscal update, but that plan isn’t convincing the ￰5￱ spike in yields has done little to offset mounting concerns about ballooning borrowing ￰6￱ faces resistance as fiscal doubts grow The five-year sale did manage to hold together better than Tuesday’s offering based on one key ￰7￱ tail, the gap between the average price and the lowest accepted bid, was just 0.4 basis points for the five-year notes.

That’s a lot tighter than the 1.4 basis points recorded for the 30-year ￰8￱ of that, markets didn’t ￰9￱ five-year yield held steady at 4.10% after the results ￰10￱ underneath that calm, trouble’s ￰11￱ of the Exchequer Rachel Reeves is under pressure to explain how she plans to plug the budget hole without sending borrowing costs even ￰12￱ month, the UK government blew past its borrowing forecast by £18 ￰13￱ lack of trust is now hitting the long end of the gilt curve ￰14￱ 30-year yield stood at 5.51% after the five-year sale, down just four basis points from earlier in the day, and after being down by more than five basis points before the ￰15￱ maturity bonds have faced the sharpest pressure this year, especially as pension funds, which traditionally soak up this debt, have reduced their ￰16￱ of England trims long-end bond exposure The Bank of England (BOE) has responded to the ￰17￱ announced last week that starting next month, only 20% of its quantitative tightening (QT) sales will focus on long-term bonds.

That’s a sharp drop, and a clear effort to calm ￰18￱ BOE will now aim its bond-selling efforts at short- and medium-term debt, where demand has remained somewhat ￰19￱ DMO has also been shifting ￰20￱ hearing repeated calls from both investors and dealers, the agency has gradually tilted its issuance toward shorter maturities so they can reduce stress on the long end of the curve and reflect what the market can actually ￰21￱ next big test comes Thursday, with auctions of 9-year and 13-year ￰22￱ will be watching closely to see if appetite holds up in that middle range. Today’s sale wraps up the UK’s long-maturity gilt issuance for the year, apart from a few remaining items like green bonds, tenders, and further QT operations by the ￰23￱ BOE on Wednesday also warned of a rapid unwinding of their trades poses a risk to financial ￰24￱ Andrew Bailey cited last week’s moves as the latest evidence that “we are living in a period of more volatile markets.” KEY Difference Wire helps crypto brands break through and dominate headlines fast