United Kingdom GBP

United Kingdom 20-Year Index-Linked Treasury Gilt Auction

Impact:
Low

Latest Release:

Date:
Actual:
1.732%
Forecast:
Previous/Revision:
1.328%
Period:
What Does It Measure?
The United Kingdom 20-Year Index-Linked Treasury Gilt Auction measures the demand and yield for government bonds designed to protect investors from inflation, offering returns that are adjusted in line with changes in the Retail Prices Index (RPI). The primary focus of this auction is on assessing the government's borrowing costs and investors’ confidence in long-term fiscal stability and inflation expectations.
Frequency
This auction occurs approximately 1 to 2 times a year, with the specific dates announced in advance by the UK Debt Management Office (DMO), and results are usually released shortly after the auction completes.
Why Do Traders Care?
Traders monitor this auction closely due to its significant implications for the UK government’s borrowing costs and broader economic conditions. Higher yields from the auction indicate rising inflation expectations and can lead to bearish sentiments in the bond market while simultaneously impacting the value of the British pound and equity markets.
What Is It Derived From?
The auction is derived from competitive and non-competitive bids submitted by institutional and retail investors, where the final yield is determined based on the bids received. The process of bidding typically employs a secret auction mechanism that ensures the resulting interest rates reflect current market conditions and inflation expectations.
Description
Preliminary auction results reflect initial market interest and competitive bidding, while final figures provide a more accurate representation of actual allocations and yield results; financial markets often react more immediately to preliminary data due to its timeliness, though final data might adjust market sentiment over the long term. In this context, the auction's results are primarily reported on a nominal basis, with yields expressed as a percentage of the par value of the bonds.
Additional Notes
This event is often considered a coincident indicator of economic sentiment, providing insights into how investors are perceived regarding future inflation and government fiscal policies. The results from the gilt auction are also compared to previous auctions and other similar government yields domestically and internationally, enhancing their relevance.
Bullish or Bearish for Currency and Stocks
Higher than expected: Bearish for GBP, Bearish for Stocks. Lower than expected: Bullish for GBP, Bullish for Stocks. A dovish tone: Signaling lower inflation concerns is usually good for the GBP but bad for Stocks due to potential lower returns from fixed income investments.

Legend

High Potential Impact
This event has a strong potential to move markets significantly. If the 'Actual' value differs enough from the forecast or if the 'Previous' value is significantly revised, it signals new information that markets may rapidly adjust to.

Medium Potential Impact
This event may cause moderate market movement, especially if the 'Actual' deviates from the forecast or there's a notable revision to the 'Previous' value.

Low Potential Impact
This event is unlikely to affect market pricing unless there's an unexpected surprise or a major revision to prior data.

Surprise - Currency May Strengthen
Actual deviated from Forecast on a medium or high impact event and historically could strengthen the currency.

Surprise - Currency May Weaken
Actual deviated from Forcast on a medium or high impact event and historically could weaken the currency.

Big Surprise - Currency More Likely To Strengthen
'Actual' deviated from 'Forecast' more than 75% of historical deviations on a medium or high impact event and may likely strengthen the currency.

Big Surprise - Currency More Likely To Weaken
'Actual' deviated from 'Forecast' more than 75% of historical deviations on a medium or high impact event and may likely weaken the currency

Green Number Better than forecast for the currency (or previous revise better)
Red Number Worse than forecast for the currency (or previous revise better)
Hawkish Supports higher interest rates to fight inflation, strengthening the currency but weighing on stocks.
Dovish Favors lower rates to boost growth, weakening the currency but lifting stocks.
Date Time Actual Forecast Previous Surprise
Feb 12, 2025
1.732%
1.328%
Jan 14, 2025
2.126%
1.2%
Oct 22, 2024
1.328%
1.2%
Sep 10, 2024
1.2%
1.304%