A Comparison of Long Bond Yields in the United Kingdom, the United States, and Germany

9 Pages Posted: 2 Aug 2005

See all articles by Martin Brooke

Martin Brooke

Bank of England - International Economic Analysis Division

Andrew Clare

City University London - Sir John Cass Business School

Ilias Lekkos

Bank of England

Abstract

Long-dated gilt yields are currently well below the comparable German and US government bond yields for the first time in many years. This article considers what factors are likely to have contributed to these changes in nominal rates of return. We conclude that much of the decline in long gilt yields can be attributed to a decline in UK inflation expectations since the mid-1970s. However, we find evidence to suggest that gilt yields have more recently also fallen in response to a significant reduction in net gilt issuance combined with an increase in demand for gilts from UK institutional investors.

Suggested Citation

Brooke, Martin and Clare, Andrew D. and Lekkos, Ilias, A Comparison of Long Bond Yields in the United Kingdom, the United States, and Germany. Bank of England Quarterly Bulletin, February 2000; Cass Business School Research Paper. Available at SSRN: https://ssrn.com/abstract=764245

Martin Brooke (Contact Author)

Bank of England - International Economic Analysis Division ( email )

Threadneedle Street
London EC2R 8AH
United Kingdom

Andrew D. Clare

City University London - Sir John Cass Business School ( email )

106 Bunhill Row
London, EC1Y 8TZ
United Kingdom

Ilias Lekkos

Bank of England ( email )

Threadneedle Street
London, EC2R 8AH
United Kingdom

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