Restraint and gluttony

It wasn’t a lot of money for the UK government to borrow. Wednesday’s £2.25bn 30-year bond auction represented only 1.5% of the government’s expected funding needs this year. But it turned out to be a lot of money for the market to digest. The 4.5% yield wasn’t especially high, but buyers were scarce. The total of bids received was only 1.5 times larger than the amount on offer. For the last two long-dated auctions the coverage ratio was 1.7 and 2. The “yield tail” – the gap between the average ...