Email of the day
Comment of the Day

December 01 2011

Commentary by Eoin Treacy

Email of the day

on a "step" in the UK Gilts chart:
"I have been following the gilt futures chart which seems to have fallen dramatically during November when gilt prices have hardly moved. Is there a problem with the chart or some other explanation?"

Eoin Treacy's view Thank you for this question which others may also find of interest. Demand for government debt has created a wide backwardation in the contract prices. The large gap in gilt prices reflects the spread between the soon to expire December contract and the more liquid March contract which the continuation chart has now been rolled into. For a better reflection of the bond's performance a yield chart is more appropriate because it is not subject to the same gyrations.

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