UK gilts on track for mammoth gain in wake of SVB collapse

LONDON (Reuters) – British government bonds on Monday were on track for their biggest one-day price gain since the day the Bank of England launched quantitative easing in March 2009, excluding wild market moves last year during the premiership of Liz Truss.

Part of a huge rally in global government bond markets following the collapse of U.S. lender Silicon Valley Bank, the 10-year gilt yield was down 33 basis points on the day as of 1413 GMT.

Apart from during the sharp recovery in gilt prices after their slump caused by Truss’s “mini-budget” in September 2022, the fall in yields was the biggest daily drop since March 5 2009 – the day the BoE began its bond-buying programme.

Short-dated U.S. Treasury yields tumbled on Monday as the collapse of Silicon Valley Bank prompted investors to scale back drastically their expectations of a big Federal Reserve rate hike and seek the safety of government debt.

British financial markets similarly reeled in their bets on a BoE rate hike in March, showing a 60% chance of a 0.25 percentage-point increase, down from around 90% last week.

(Reporting by Andy Bruce; Editing by William Schomberg)