This is very bad news for the british government.
The UK Debt Management Office (DMO) attracted just £1.67bn in bids for its sale of £1.75bn of 2049 gilts this morning, its first uncovered auction of conventional gilts since 1995. The cover of just 0.93 times is believed to be the lowest in history and far worse than the 0.99 times in 1995. The average cover of the last three auctions was 2.1 times. The DMO is expected to issue £146.6bn of gilts this year compared with £58.4m last year, and another £110bn in 2010. The shortage of demand caused gilt futures to slump as to a session low of 119.45 while 10-year yields rocketed 18 basis points to 3.5pc, illustrating that it will cost the Government more to raise the debt required.
